Why Zynga Is Back

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Zynga Inc. (NASDAQ: ZNGA) has had a solid 2017 so far, and it looks like this company could be on its way up after sitting in a holding pattern for a few years. The company reported its most recent quarterly results after the markets closed on Tuesday, and investors responded very positively and sent shares to a high not seen since 2014. Apart from earnings the company also announced a key acquisition.

Excluding Wednesday’s move, the stock has been on a run, up about 43% year to date. Over the past 52 weeks, the stock is up around 34%.

The company said that it had $0.02 in earnings per share (EPS) on $224.6 million in revenue, while consensus estimates from Thomson Reuters had called for $0.02 per share and $207.53 million. In the same period of last year, Zynga said it had EPS of $0.01 and $196.72 million in revenue.

Overall, Zynga delivered its best revenue and bookings performance in over four years, so this quarter is something for investors to celebrate.

Mobile revenue in the quarter was up 33% year over year and mobile bookings were up 15%. In the third quarter, mobile represented 87% of its total revenue and bookings. Also the mobile audience for the quarter was 19 million average daily active users, up 19% year over year.

Looking ahead to the fourth quarter, the company expects to see revenues of $215 million, with bookings of $210 million and net income of $13 million. The consensus estimates call for $0.03 in EPS and $218.59 million in revenue for the coming quarter.

Separately, the company announced that it has entered into an agreement to acquire the mobile card game studio of Peak Games. The acquisition is expected to strengthen Zynga’s casual card game portfolio with the addition of Peak Games’ mobile card games such as Spades Plus and Gin Rummy Plus, the largest spade and rummy mobile games in the world. The total consideration for the acquisition of Peak Games’ mobile card studio is $100 million in cash, and the transaction is expected to close late in the fourth quarter.

Shares of Zynga were last seen up over 9% at $4.01, with a consensus analyst price target of $4.24 and a 52-week range of $2.40 to $4.09.