Why Glu Mobile Inc. Shares Could Fly Above $5

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Glu Mobile (NASDAQ: GLUU  ) gained 3% this morning after Benchmark upgraded the mobile-game publisher from hold to buy.

So what: Along with the upgrade, analyst Mike Hickey planted a price target of $5.60 on the stock, representing about 26% worth of upside to yesterday's close. So while contrarian traders might be turned off by Glu Mobile's Android TV-related pop yesterday, Hickey's call could reflect a sense on Wall Street that mobile gaming trends give the stock plenty of room to run.

Now what: According to Benchmark, Glu Mobile's risk/reward trade-off is particularly attractive at this point. "In our view, management has renewed credibility, from recent product success, after a significant retooling of their development expertise," said Hickey. "The Company's product portfolio and subsequent financial performance should benefit from the rapidly expanding smartphone/tablet hardware device market and related consumer software ecosystem." With Glu Mobile continuing to boast a rock-solid balance sheet and shares that are still off more than 20% from their 52-week high, the downside might even be limited enough to bet on those prospects. 

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  • Report this Comment On June 30, 2014, at 11:19 AM, ltaschner wrote:

    Ummm... you guys missed the boat completely on why this went up. It has nothing to do with what you wrote in the article. It has to do with the Kim Kardashian game.

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