Internet information provider Zynga Inc. (ZNGA) will announce its fourth quarter results on February 14 after the market closes. The company will be reporting its quarterly numbers after its successful completion of IPO in December last year.
The earnings results will be keenly watched especially in the wake of Facebook IPO news. Zynga priced its share at $10 a share and on listing in December, the stock slipped more than 10 percent on weak market conditions.
However, after the Facebook filed its application for an IPO with SEC, Zynga stock reversed the trend and is now trading at 30 percent plus premium to its original issue price. The company's result is likely to throw some light on its dependence on Facebook for its revenues.
Zynga is having 232 million monthly active users (MAU) and 60 million daily active users (DAU). Analysts will be eager to know how the company is performing on MAU and DAU during the quarter. The company's games are popular in Facebook and enjoys wide margin than others. Its closest rival Electronic Arts is having only about 47.6 million MAUs.
Street analysts are currently estimating Zynga to earn 3 cents a share on revenues of approximately 301 million. The analysts' revenue estimation is significantly higher than $195.8 million recorded in the year-ago quarter. For the year 2011, analysts are predicting the company to earn 19 cents a share on revenues of about $1.15 billion.
The company is also likely to show stronger total bookings for the December quarter. The total bookings represent virtual goods and ad sales booked during the fourth quarter and a part of it normally gets deferred for future periods for the recognition of revenue.
JPMorgan expects Zynga to record 26 percent growth in its booking for 2012 and for 2013 the brokerage is estimating a slower growth of 23 percent. The optimism will be fueled by new game launches and greater opportunities on the heels of new gambling regulations.
Zynga's concentration is on the $3.5- $5.0 billion online gambling market. The company got a boost from the Justice Department on the legislation about online gambling.
On January 25, Barclays Capital initiated with Overweight rating, while Goldman Sachs initiated with a Buy rating and kept $13 price target. The brokerage expected volatility in the stock price due to its early stage. Wedbush, on the other hand, reaffirmed its rating of Outperform on February 9 before the fourth quarter earnings release. The brokerage lifted the price target to $14 from $12.50.
While two analysts have Strong Buy rating, three analysts rate Zynga shares as Buy and four analysts recommend Hold. Only one analyst term the stock as Underperform.
Any further stock movement will be guided by the results since the stock closed Monday‘s trading at $13.42 compared to analysts' highest price target of $14.00. Any negative news could drag down the stock.