Uncertainty continues to plague Zynga Inc (NASDAQ:ZNGA) as analysts and investors debate whether the company has much of a future. Wedbush analysts think the game maker is on the right track but admit that there is still much more work to do before a recovery is evident.

Zynga Inc Still A 'Show Me' Stock: Wedbush

Zynga moves slowly compared to competitors

In their report dated Nov. 7, 2014, Wedbush analysts Michael Pachter, Nick McKay and Alicia Reese said Zynga’s pace of new releases is “underwhelming.” That, combined with the limited visibility into the game maker’s future, means that Zynga remains a “show me” stock, although that view hasn’t kept them from setting an Outperform rating and $6 per share price target on the company.

The Wedbush team point out that competitor King Digital Entertainment PLC (NYSE:KING) churns out new titles much more quickly than Zynga. They say King has launched one or more titles in every quarter despite having a staff that’s half the size of Zynga’s staff. As a result, many investors have become impatient with the game maker’s turnaround efforts.

The analysts point out that Zynga’s latest earnings report was in line with consensus estimates and that management maintained their previously provided guidance for the full year. They were a bit surprised that management reiterated their guidance because they thought that Zynga was contemplating another major new title, but the game maker has not yet announced one.

Can Zynga management execute?

The Wedbush team thinks Zynga is moving in the right direction but notes that the company had a major misstep with the re-launch of its Poker game. The re-launch caused some players to stop playing the game, which was a big hit to Zynga’s bookings. The misstep means that there are concerns that Zynga management cannot execute a turnaround.

However, they believe management did make the right decision in reintroducing the older poker game as Zynga Poker Classic. They think the game maker will be able to fix its relationship with former players of the game.

What Zynga needs for a share price rally

The analysts think that Zynga must release a new franchise title and that doing so should cause its shares to rally. They note that while the Farmville 2 franchise has been doing well, the other sequels and franchise releases have been struggling. Even the company’s recently released NFL Showdown hasn’t been performing well.

The Wedbush team points out that right now, Zynga stock is trading at an enterprise value that’s just barely one time higher than its revenues. They think that if Zynga management shows that they are on the right track toward delivering growth in both revenues and profits, the game maker’s shares will rise “substantially.”

Currently Zynga shares are on the Wedbush Securities Investment Committee’s Best Ideas List. They give a fairly high multiple of 4.5 times their 2015 estimate for EV / bookings, resulting in their $6 per share target price. They think the multiple is warranted because “the risk of negative earnings or cash flow has been mitigated” and also that Zynga has begun to grow its bookings and EBITDA.

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