JPMorgan cites favorable valuation in upgrading Box Inc (BOX) to Overweight; Benchmark Positive on Zynga Inc (ZNGA)

From Benchmark’s assessment of Zynga Inc (NASDAQ:ZNGA), the stock features a favorable risk/reward standing. Some of the favorable things that Benchmark has noted in Znyga include strong balance sheet, cost curtailment efforts, mobile growth, recent product launches and strong pipeline. Bookings stability is another strength that Benchmark sees in Zynga.

On the cost-savings side, Benchmark noted that Zynga announced in May plans to make gross savings of $100 million by 4Q2015. The company is also looking to $45 million in annual cost-savings. Among other areas, Zynga’s cost-saving is expected to come through workforce reduction.

As much as Benchmark is constructive on the future of Zynga Inc (NASDAQ:ZNGA), it believes that there exist a number of red flags in the stock. Such risks include limited pipeline visibility, weak product executions and cracks in Zynga’s Web business.

For the coming quarter results, Benchmark believes that Zynga could surpass its own estimates, partly because the company has in the recent times tended to issue conservative outlook. Although Zynga guided bookings in the range of $155 to $170 million for 3Q2015, Benchmark believes bookings could be $164 million. Moreover, Benchmark believes that Zynga could post EBITDA loss of $6.2 million against Zynga’s guided range of a loss of $17 to $7 million.

Benchmark has a 12-month price target of $3.01 on Zynga Inc (ZNGA). It rates the stock a Buy.

JPMorgan upgrades Box Inc (NYSE:BOX) to Overweight on the basis that the stock is cheap and has bright future

After carefully assessing Box Inc and the recent developments around it, analysts at JPMorgan have come to the conclusion that the stock has a positive future.

It is not out of nothing that JPMorgan has decided to upgrade Box to Overweight from Neutral. According to the rating firm, there are multiple growth catalysts and valuation issues that make it constructive on Box.

On the valuation side, JPMorgan notes that recent sell-off in Box has made the stock cheap and getting in at the current price level presents favorable risk/reward scenario.

On growth catalysts front, JPMorgan among other things notes that the recent partnership between Box and International Business Machines Corp. (NYSE:IBM) presents a huge growth opportunity for Box. Moreover, JPMorgan is also impressed by the steps that Box is taking to improve its profitability.

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