King Digital Entertainment PLC (NYSE:KING)’s Candy Crush Saga has been a huge success for the company and majority of the revenue comes from it. However that is not the only gig by the company and it looks promising in the coming years according to analysts.
Michael Olson, Senior research analyst at Piper Jaffray, was on CNBC and he explained the reasons for upgrading King Digital Entertainment PLC (NYSE:KING)’s stock target to $28. He felt that the ranks of the games by the company have been increasing and it is now in top 200 of the iOS games and the top 20. He feels that the stock is at a point where even inline guidance would be good enough to push the stock on upside and general flattish revenues of the street might help it even more.
Olson feels that Candy Crush Saga has been the biggest game of the company so far with 67% of the booking received by King Digital Entertainment PLC (NYSE:KING) in Q1 coming from Candy Crush. However, he thinks that this would go below 50% as we go ahead, probably 18 months from now. He also mentioned about other hit games by the company such as Farm heroes and Pet Rescue Saga which have stayed in the top ten 10 over the last six months.
“67% of their bookings in Q1 came from Candy Crush and we do think that, as we get to kind of late 15 and beyond, we’re going to see less than 50% of the bookings coming from Candy Crush” Olson stated suggesting that King Digital Entertainment PLC (NYSE:KING) is much more than just a gig.
He said that the games also bring revenue with increasing number of bookings so it’s not just about ranking and moreover the range of bookings per user has been consistent. He also thinks that the newer version of Candy Crush to be launched later this year would stop the decline in the number of booking and help boost the revenues of King Digital Entertainment PLC (NYSE:KING).
Olson said that the games being developed by the company are not just small budget games designed in a garage and he also emphasized on the fact that King Digital Entertainment PLC (NYSE:KING) is spending more than $400 million on marketing of the games.