Shares of Glu Mobile (NASDAQ:GLUU) have jumped today, up by 10% as of 2:40 p.m. EDT, after the mobile-game maker received an upgrade when Roth Capital boosted its rating to buy.
Roth Capital analyst Darren Aftahi upgraded his rating on Glu while assigning a price target of $7 for the stock. Shares had been completely demolished in early August after Glu reported second-quarter results and drastically cut its full-year 2019 bookings outlook in part to "reflect the timing of new launches." Aftahi believes that sell-off was overdone and that the stock has been "overly penalized."
Shares now represent a compelling risk-reward trade-off and "look attractive relative to second-half 2019 and 2020 estimates, with new games likely to help substantiate out-year growth," the analyst wrote in a research note to investors.
Glu, which has historically licensed intellectual property for games, has been working to grow its royalty-free titles. Royalty-free games represented 64% of bookings in the second quarter. The company also said it was adjusting its guidance methodology for new games, choosing not to include bookings in its forecasts until a title launches globally. "We feel this is a prudent approach to reduce guidance volatility and increase our forecast precision," said CFO Eric Ludwig.
Glu's bookings in the third quarter are trending to an estimated $117 million, according to Roth's proprietary tracking model, which would top Glu's outlook of $110 million to $112 million in bookings for the quarter. A little further out, Glu is currently forecasting fourth-quarter bookings to be $101.5 million to $103.5 million.