In a research report published this morning, RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating on King Digital (NYSE:KING), but raised the price target to $20 (from $17), after the company beat earnings expectations with a stronger than expected Candy Crush Soda launch.
Mahaney noted, “KING traded up 20% in the aftermarket – this was yet another low-bar stock (AMZN, NFLX, GOOG, TRIP…), given material recent underperformance.We continue to view KING as a leading Casual Gaming company. Despite product transition challenges, KING is differentiated in that it has a Mobile-oriented, freemium-model, highly profitable platform. What we would look for in order to become constructive is a demonstration of overall Bookings & Revenue growth WITH diversification away from the dominant Candy Crush franchise. This should be attainable, but probably not until 2016. We view valuation (4x ’15 EV/EBITDA) as undemanding, but the enormous fashion risk/volatility of the gaming sector challenges anything close to a premium valuation.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a total average return of 22.6% and a 66.8% success rate. Mahaney has a -26.5% average return when recommending KING, and is ranked #15 out of 3510 analysts.