There’s no denying that 2013 was a rough year for Zynga Inc (NASDAQ:ZNGA), but Wedbush analysts think this year will be different. They maintained their Outperform rating and $6 per share price target on the game maker.

Zynga

Zynga completes NaturalMotion acquisition

This week Zynga Inc (NASDAQ:ZNGA) filed a shelf registration to enable former shareholders of NaturalMotion to sell up to 28.2 million Zynga shares in one or more offerings. Zynga itself won’t receive proceeds from the sales. Zynga announced in late January that it had reached an agreement to acquire NaturalMotion for $391 million in cash and 39.8 million Zynga shares.

Of the shares Zynga handed out, about 11.6 million of them went to NaturalMotion employees who remain with Zynga after the acquisition, which was completed this past week. Those shares will vest over the next three years, although the remaining shares aren’t subject to a vesting period, so they were part of the shelf.

Analysts Michael Pachter, Nick McKay and Nick Citrin believe the acquisition was a pricy one for Zynga Inc (NASDAQ:ZNGA), noting that the shares it paid for NaturalMotion were worth about $184 million at Tuesday’s closing price. When added with the cash, the end result is $575 million, which is much larger than what the company paid for OMGPOP, which it acquired in 2012. However, they do note that Zynga is getting a number of popular game titles and some new technology with NaturalMotion, unlike with OMGPOP, which really only brought the game Draw Something.

Zynga looks to overcome

The Wedbush team thinks that new CEO Don Mattrick has done a good job streamlining its cost structure and stabilizing its core business. As a result, they think Zynga Inc (NASDAQ:ZNGA) is poised to grow both revenues and profits this year. They think the company’s stock could even rise past their $6 a share price target if management is able to successfully execute Mattrick’s plan. They also believe that the contribution margin on bookings growth can surpass 30% and expect to see the company return to profitability this year.

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