Zynga, Inc. (NASDAQ: ZNGA) took a bit of a reality check this week. After a stellar prior week on news of preannounced earnings and on an acquisition, investors and analysts alike were a bit mixed as far as the outlook for the social gaming company. Now shares are close to where they started, all over again.

It is no secret that Zynga is a very controversial company, nor is it a secret that this is a battleground stock. The company has many bulls behind it and many bears betting against it. A pair of analyst calls from this last week only highlights the controversy here.

BofA Merrill Lynch downgraded Zynga to Underperform from Neutral on Monday. The firm’s price target is $3.80 per share. The analyst team said that there is a lot of execution already priced in the stock. They even see risk to 2014 guidance and pointed out excessive valuations – Take-Two Interactive Inc. (Nasdaq: TTWO) trades at less than 1-times 2015 sales, Zynga at over 3-times.

UBS has a very different take. The firm raised its rating to Buy from Neutral on Tuesday and boosted its price target up to $6 from $4. UBS thinks that Zynga’s core operation has stabilized. Other drivers are the cost cuts and the recent $527 million acquisition. UBS differs from Merrill Lynch, signaling that first quarter guidance and 2014 guidance will prove to be conservative.

Zynga shares rose up to $4.40 from $3.56 two weeks ago on the company’s news-break. This last week brought a new 52-week high of $4.97, but shares were back down to $4.53 in late Friday trading. This stock has not given back its gains from the initial pop, but the stock is back to within about 3% of that adjusted level.

For whatever it is worth, Zynga’s stock price is above the $4.26 consensus price target from analysts. Its short interest as of January 15 was also 37.4 million shares. The battle continues.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.