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Why China Mobile Games Shares Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of China Mobile Games & Entertainment Group Ltd. (NASDAQ: CMGE  ) rose nearly 10% Monday after analysts initiated coverage on the stock with a "buy" rating and $32 price target, or a 58% premium to today's close.

So what: Specifically, Nomura Securities analysts Chao Wang and Liz Guan suggested China Mobile Games' data mining abilities, extensive pre-installation network, and operation and game development experience help differentiate it among its peers. This should help China Mobile Games to increase its mobile game retention rate going forward.

Now what: Today's initiation also arrives on the heels of China Mobile Games' significantly better-than-expected Q1 results, which resulted in a 12% pop on Friday. In the report, China Mobile Games stated revenue increased 488% year over year to $34.5 million, which helped it swing from a loss in the same quarter last year to an adjusted profit of $0.21 per share. As it stands, I'm sticking by my call that China Mobile Games should be able to reward patient investors from here as it continues pursuing profitable growth.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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