According to www.seekingalpha.com, US analyst firm “ThinkEquity” is pushing the Glu Mobile (GLUU) case, saying the stock could be worth USD 6.00. Glu Mobile designs and markets games for mobile phones and is benefitting from the success of Apple’s iPhone and iPad. The ThinkEquity-analyst raised its price target and reiterated its Buy rating on the stock citing the company’s alternative monetization mechanisms and new games. The price target reflects a significant 20% premium to the current market price. Since the beginning of May, Glu Mobile’s share price has risen some 40% and is up more than 160% year-to-date.
The company has been seeing a lot of success, having recently raised its quarterly and yearly guidance. Meanwhile, with Zynga expected to file paperwork for its IPO in the near future, the mobile and online gaming sector could also see its multiples rapidly expand. Combined, these events could lead to significant value being unlocked for this well-positioned stock.
I am certainly a fan of the Glu Mobile story since I strongly believe in a continuation of the smartphone boom. However, as argued by me so many times: an even better bet on the industry trend is G5 Entertainment, listed in Sweden (www.g5e.com/investor). While Glu Mobile is still losing money, G5 Entertainment has impressive margins and is expanding its net cash position every quarter. With a strong line-up of new game releases for the coming weeks, the company seems well prepared to deliver on its target to release 80 new games during 2011. G5 management is currently guiding for a 2011 EPS of SEK 1.90 (up from SEK 1.01 in 2010) and they have indicated in the recently published Q1 report that this guidance is rather conservative. As we speak, the G5 share is trading at SEK 21.40, implying a PER of 11x…
I am long G5 Entertainment and I hope you are too!