On Jul 10, 2013, Zacks Investment Research upgraded
Zynga Inc (
to a Zacks Rank #1 (Strong Buy). With a strong year-to-date
return of 41.8% and a positive estimate revision trend, Zynga is
an attractive investment opportunity.
Why the Upgrade?
The recent top-level management change is the primary factor
behind the upgrade. In a surprising move, Zynga hired Don
Mattrick, ex-head of Microsoft's Xbox division, as the chief
executive officer ("CEO"). On Jul 8, Don Mattrick replaced
Zynga's founder Mark Pincus, who will continue as the chief
product officer and president of the board.
Don Mattrick is credited for developing major EA franchises
namely FIFA and the Sims. His successful stint with Microsoft saw
the release of Kinect motion technology. He is known for his
outspoken manner and also for his management style.
Don Mattrick will look after the day-to-day affairs of Zynga,
while Mark Pincus will be responsible for developing games and
overseeing important strategic decisions through a new executive
committee (jointly headed with Mattrick).
Although we believe that the new CEO has a tough job on his
hands, the surge in stock price since the announcement indicates
increasing investor confidence in the management change.
Zynga has beaten the Zacks Consensus Estimate in the last four
quarters with an average beat of 36.2%. Apart from the CEO
change, the recent acquisition of Spooky Cool Lab is another
positive move as it will help Zynga to gain traction in the
online casino-style gaming market. This will boost bookings going
The Zacks Consensus Estimate for fiscal 2013 remained steady at a
loss of 17 cents per share over the last 60 days. However, this
estimate is much better than 30 cents loss reported by Zynga in
For fiscal 2014, the Zacks Consensus Estimate improved a penny to
a loss of 13 cents per share over the same period.
Other Stocks to Consider:
Investors can also consider other social and casino gaming stocks
that are doing well right now. These include
Ameristar Casinos (
Multimedia Games (
International Game Technology (
. While Ameristar and Multimedia carry a Zacks Rank #1 (Strong
Buy), International Game Technology has a Zacks Rank #2
AMERISTAR CASIN (ASCA): Free Stock Analysis
INTL GAME TECH (IGT): Free Stock Analysis
MULTIMEDIA GAME (MGAM): Free Stock Analysis
ZYNGA INC (ZNGA): Free Stock Analysis Report
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