By Carly Forster

King Digital Entertainment

King Digital Entertainment PLC (NYSE:KING) is a London, England based interacting entertainment company for mobile devices. The company has launched over 190 games in over 200 countries, most notably the very popular game Candy Crush. King Digital Entertainment released its second quarter earnings report on August 12th and its results just missed analysts’ expectations.

During its Q2 report, King Digital Entertainment reported $0.59 Non-GAAP earnings per share, missing analysts’ consensus of $0.60 by $0.01. During the same quarter last year, the gaming company posted $0.45 earnings per share. King Digital Entertainment had revenue of $593.60 million for the quarter, compared to the consensus estimate of $455.50 million. The company’s quarterly revenue was up 30% on a year-over-year basis. On average, analysts’ predict King Digital Entertainment will post $2.38 earnings per share for the current fiscal year.

Shares of King Digital Entertainment PLC (NYSE:KING) dropped more than 20% on Tuesday after its earnings report was released.  However, the gaming giant remains confident that it will continue to be more and more profitable. The company’s CEO, Riccardo Zacconi said in a statement, “While our second-quarter gross bookings came in below our expectations leading us to reduce our outlook for full-year 2014 growth rates, from a profitability perspective, the business continued to perform well, delivering adjusted EBITDA margins of 42 percent and generating healthy cash flows of $154 million to boost cash and cash equivalents to more than $800 million.”

Shares of King Digital Entertainment opened at $14 on Thursday, August 14th. The gaming company has a 1-year high of $23.48 and a 1-year low of $13.65. The stock’s daily moving average is $14.12 and has a 50-day moving average of $19.57. The market cap for King Digital Entertainment is $4.32 billion and its P/E ratio is 6.95.

On August 13th, RBC Capital analyst Mark Mahaney downgraded his rating for King Digital Media from Outperform to Sector Perform with a $15 price target. He reasoned, “Our Long Thesis was predicated on the belief that the company could demonstrate overall Bookings & Revenue growth WHILE demonstrating diversification away from its dominant Candy Crush franchise.” Mahaney has a +30.5% average return on all stocks and a 75% success rate in making recommendations.

King Digital

J.P Morgan analyst Doug Anmuth also downgraded his rating for King Digital Entertainment PLC (NYSE:KING) on August 13th from Overweight to Neutral, also lowering his price target from $30 to $18. He noted, “King is seeing an increasing proportion of gross bookings in virtual currency/gold bars, which leads to less frequent payments but at higher absolute amounts. We expect virtual currency to continue to impact gross bookings going forward as King launches new games with virtual currency and expands currency to other existing games, including Candy on Tencent in China.” Anmuth has a +31.7% average return on all stocks and a 71% success rate in making recommendations.

On average, top analysts’ consensus for King Digital Entertainment is HOLD.

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Carly Forster writes about stock market news. She can be reached at [email protected]