Gluu Mobile(GLUU-NSD) Goldman initiates on valuation

STA Research
by: STA Research

Goldman Sachs’s analyst Michael Ng today initiated coverage today of Glu Mobile with a Buy rating and a $9.80 target.  Ng believes that the company’s growth will be pushed by new game launches, growth games, and tuck-in acquisitions.  The analyst believes that it’s margins should increase on new bookings and operating leverage which will push a price appreciation to it’s equity.

STA Research has a average target on the stock of $10, and a consensus Strong Buy rating. STA’s view of the stock is Slightly Bearish with a score of 4 out of 10, where 0 is very bearish and 10 very bullish.
What to like:
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
Positive free cash flow
The company had positive total free cash flow in the most recent four quarters.
Superior Revenue Growth
This stock has shown top quartile revenue growth in the previous 5 years compared to its sector.
High Gross Profit to Asset Ratio
This stock is in the top quartile compared to its peers on Gross Profit to Asset Ratio. This is a popular measure among value investors for showing superior returns in the long run.

 

 

What to not like:
High volatility
The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.
Overpriced compared to earnings
The stock is trading high compared to its peers on a price to earning basis and is above the sector median.
Overpriced on cashflow basis
The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Poor capital utilization
The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.
Overpriced on free cash flow basis
The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Low Earnings Growth
This stock has shown below median earnings growth in the previous 5 years compared to its sector

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2 thoughts on “Gluu Mobile(GLUU-NSD) Goldman initiates on valuation”

  1. This Co is a damn scam! The way it has tanked since their ladt ER in a roaring market is flat out disgusting!!! Thank god I sold 75% of my holdings over $10! I almost held

    I will never buy this Co again! I honestly feel bad for all those who have been holding this dumpster fire while the rest of the market roars higher and higher and higher (all-time high after all time highs for so many others)

    Nightmare of a stock can’t even get a boost after the Goldman Coverage & buy recommendation of nearly $10 bucks a share 25% higher than the embarrassing $8 price today! How is this even possible?

    Something seems very shady with this stock!

    1. Hi, thanks for your comment! Yes, technically speaking this stock should be over $10, but on certain stocks correct valuation can be held back for sometime, but eventually the stock will come in line with fundamentals. GILD is another great example!

      Cheers, STA Research

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