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On Friday, Baird analysts downgraded Playtika Holding Corp . (NASDAQ:PLTK) stock from Outperform to Neutral and reduced the price target to $6.00 from the previous $9.00. The revision reflects a growing concern over challenges within the mobile gaming sector and specific issues within Playtika’s core franchises. According to InvestingPro data, the stock has fallen over 18% in the past week, with current trading levels suggesting the stock is in oversold territory.
The firm acknowledged the intrinsic platform value of Playtika and the potential for organic growth to re-accelerate in the future. However, the current headwinds in the mobile gaming industry, along with troubling trends in the company’s key franchises, have led to a more cautious outlook. Despite these challenges, InvestingPro analysis shows the company maintains strong fundamentals with a 72.65% gross profit margin and an attractive 7.02% dividend yield.
Baird’s analysts admitted the downgrade came later than ideal but deemed it a necessary step due to the lack of clarity on the performance of new titles expected later in the year. They also cited the need for more concrete signs of recovery in user engagement and monetization of top games before adopting a more optimistic stance again. For deeper insights into Playtika’s valuation and 8 additional key ProTips, including detailed financial health metrics, check out the comprehensive Pro Research Report available on InvestingPro.
The report also touched upon the industry-wide consolidation in mobile gaming, suggesting that it might not provide the expected valuation support or serve as a catalyst, contradicting part of Baird’s previously more constructive long-term thesis for Playtika.
The new price target of $6.00 represents a significant decrease from the earlier $9.00 target, indicating Baird’s recalibrated expectations for Playtika’s stock performance in the near term.
In other recent news, Playtika Holding Corp. reported a significant earnings miss for the fourth quarter, with a loss of $0.04 per share, falling short of analysts’ expectations of $0.18 in earnings per share. Despite this, the company exceeded revenue projections, reporting $650.3 million against the consensus estimate of $617.66 million, marking a 1.9% increase year-over-year. Revenue from Playtika’s Direct-to-Consumer platforms grew 8% year-over-year to $174.6 million, while casual games revenue rose 11.3% in the same period. However, revenue from social casino-themed games declined by 10% compared to the previous year. The company also highlighted its acquisition of SuperPlay as part of its growth strategy. Looking forward, Playtika provided guidance for fiscal year 2025, projecting revenue between $2.80 billion and $2.85 billion, which is above the analyst consensus of $2.75 billion. The company anticipates 2025 to be a transitional year as it invests in newly acquired studios. Additionally, the board declared a quarterly cash dividend of $0.10 per share, payable on April 4, 2025.
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