Analyst: This Is Good News for GLU Stock
Glu Mobile Inc. (NASDAQ:GLUU) stock surged about 30% on Thursday after reporting earnings and announcing a partnership with Taylor Swift to develop a game featuring the singer. After a prick jump like that, it might be a good idea for investors to take some money off the table.
Or maybe not.
Benchmark analyst Mike Hickey believes GLUU stock has a lot of upside left, even after Thursday’s jump. Hickey upgraded the company stock from “Hold” to “Buy” and set a price target of $3.68. That’s about a 38% upswing from the stock’s current price.
Hickey says that GLUU stock has likely reached a bottom since sliding about 70% from a 52-week high of $7.03 on May 5, 2015. At its current price, he also sees a more balanced risk/reward profile.
Hickey added that there are several growth drivers that will ramp up the stock to his target price. Glu Mobile, Hickey said, will continue to benefit from its strong track record of creating hit games, continued growth in the mobile game app market, the future release of another five celebrity games, and a strong balance sheet. Glu Mobile also recently announced a share repurchase plan—a possible sign that management thinks shares are cheap and have confidence in the company.
Earnings for the fourth quarter were a loss of $0.20 per share and revenue of $61.0 million. Those numbers beat analysts’ estimates of a $0.30-per-share loss on revenue of $50.2 million.
Glu Mobile has had great success with its Kim Kardashian game, which brought in $13.6 million in fourth-quarter revenue. It was a huge hit when released in 2014, generating $74.0 million in revenue for that year.
But having a celebrity attached to a product isn’t always a sign of guaranteed success. CEO Niccolo de Masi is already calling the sales of Glu Mobile’s Katy Perry game, which launched in November, a disappointment.
In the first quarter of 2016, Glu Mobile plans to launch its Kylie and Kendall Jenner game, with games featuring Britney Spears and Nicki Minaj in the pipeline.