Shares of mobile game maker Playtika (PLTK) are on the rise on Tuesday after several Wall Street analysts initiated coverage of the stock with Buy-equivalent ratings. Credit Suisse analyst Stephen Ju expects the company to be able to continue to drive high-single-digit percentage organic revenue growth, while his peer at Goldman Sachs is forecasting Playtika's revenue to grow annually at 8% through 2024. More cautious on the name, Bank of America analyst Ryan Gee started coverage of Playtika with a Neutral rating, saying he is concerned about concentration to social casino games and cautious that its "history making new games is limited."
HIGH-SINGLE-DIGIT ORGANIC GROWTH: Credit Suisse analyst Stephen Ju initiated coverage of Playtika with an Outperform rating and $35 price target. The analyst expects the company to be able to continue to drive high-single-digit organic growth, solely from its existing franchises without any new game contributions. He also sees incremental monetization opportunity through advertising.
Voicing a similar opinion, Goldman Sachs analyst Michael Ng started coverage of Playtika with a Buy rating and $35 price target. The analyst forecasts the company's revenue to grow annually at 8% through 2024, despite tough comps in 2021, with further upside potential driven by growth in its core portfolio, synergies from recent acquisitions and the launch of new games annually starting in 2022.
Noting that he is "particularly bullish on the category," Stifel analyst Drew Crum initiated coverage of Playtika with a Buy rating and $38 price target. The analyst sees the company benefitting from the favorable backdrop for mobile gaming. Platika's expertise in live ops, along with "a proven M&A track record," give him added confidence in his assumptions, Crum added.
Morgan Stanley analyst Brian Nowak also started Playtika with an Overweight rating and $35 price target. The analyst noted that the company operates in the largest and fastest growing segment of video gaming, the $100B mobile gaming market, which Nowak sees growing in size to $170B by 2024. Playtika has established itself as the leader within social casino and while he expects continued social casino leadership, he sees its non-casino games becoming a larger part of the mix. The analyst expects 9% revenue growth through 2024, with a path to $1.1B 2024 EBITDA.
Meanwhile, UBS analyst Eric Sheridan initiated coverage of Playtika with a Buy rating and $40 price target. The analyst told investors that is positive on the company offering a "unique mix" of mobile revenue growth, "industry-leading" margins, and an "established" capital allocation track record.
ON THE SIDELINES: Bank of America analyst Ryan Gee initiated coverage of Playtika with a Neutral rating and $35 price target. While calling it "the largest, most-profitable mobile game publisher in the west" with more top-grossing games than peers, and stating that Playtika "remains nicely positioned on mobile," Gee told investors that is concerned about concentration to social casino games and cautions that its "history making new games is limited."
Citi analyst Jason Bazinet also started Playtika with a Neutral rating and $33 price target. The analyst believes potential upside from future acquisitions is offset by some risk of daily payer conversion rates falling from recent COVID-induced peaks. As such, he sees the stock's risks and rewards as relatively balanced.
PRICE ACTION: In morning trading, shares of Platika have gained almost 6% to $34.16.
