Apps & Software

Analysts Come Out Swinging for King Digital

King Digital Entertainment PLC (NYSE: KING) has seen its quiet period come to an end. Now the underwriters who participated in the initial public offering (IPO) are free to cover it with official analyst research reports and ratings. Many investors will be comparing this one to Zynga Inc. (NASDAQ: ZNGA).

As a reminder, King Digital offered some 22.2 million shares at an IPO price of $22.50 per share, in the mid-point of the expected range of $21 to $24 per share. At the IPO price, the company was valued at $7.1 billion. The problem is that King fell 10% within the first few minutes out of the chute before ultimately closing at $19.00 on its first day, a loss of 15.5%.

Things went from bad to worse after the first few trading days. The highest closing price has been $19.75, and the highest print, not counting the first day, was $20.15. This stock’s low since then has been $15.84, and shares closed up 1.4% at $17.56 on Friday.

While not all the reports have been seen on Monday, these are the ones and targets we have seen so far on Monday morning:

  • Started as Buy with a $23 price target by Bank of America Merrill Lynch.
  • Started as Buy and with a $27 price target at Deutsche Bank.
  • Started as Buy and a $22 target price at Stifel Nicolaus.
  • Started as Overweight and with a $30 price target at J.P. Morgan.
  • Started as Outperform with a $25 price target at BMO Capital markets.
  • Started as Outperform with a $28 price target at Credit Suisse.
  • Started as Outperform and with a $21 price target at Pacific Crest.
  • Started as Outperform and a $24 price target at RBC Capital Markets.
  • Started as Neutral and a $19 target price at Piper Jaffray.

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It appears as though there we no Sell ratings. King is best known for its Candy Crush freemium game. It shares a trait with Zynga in that Zynga was dependent on just a few titles when it came public. Zynga has also been crushed more than King Digital since it came public, with a $3.3 billion market cap. At least King Digital is not so dependent on Facebook.

Early trading indications on Monday showed King Digital up 2.5% at $18.00 in fairly active premarket trading. At least trading was indicated higher on Monday. Otherwise, King Digital was going to be called Crushed Candy.

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