Wedbush Initiates Coverage Of Glu Mobile Inc. (NASDAQ:GLUU) With Neutral Rating

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Wedbush analysts are cautiously optimistic of Glu Mobile Inc. (NASDAQ:GLUU)’s prospects. As such, they have initiated coverage of the stock with a Neutral rating and $3.30 price target. According to Wedbush, Glu’s future is predicated on the success or failure of its various celebrity-themed games.

For Glu, Kim Kardashian: Hollywood has been a successful celebrity title and the company hopes the strategy can pay off for some more time. As such, Glu Mobile Inc. (NASDAQ:GLUU) is planning to launch more celebrity-based games, including a title about Katy Perry that is pending release.

Because there is no guarantee that any of Glu’s current celebrity-themed games will be successful, Wedbush is advising investors to keep a distance from Glu stock. According to the firm, investors will have the opportunity to buy the stock on the upswing if the pending celebrity releases turn out to be successful. But in case they disappoint, investors can weigh to enter the stock in the dip.

2016 celebrity-based game release

Glu Mobile Inc. (NASDAQ:GLUU) is expected to release a number of celebrity-based games in 2016 to hopfully track the success of KimKardashian: Hollywood. Among the games in the pipeline for 2016 are a game about Kylie and Kendall Jenner, which is slated for late 1Q2016 release and another game about Nikki Minaj game, which is expected to come out in summer. There is also a Britney Spears game for spring release.

Shift in strategy

While Wedbush is recommending that investors keep of Glu until there is visibility into its celebrity-themed games, the firm does acknowledge that the company has a reliable business model. In particular, Wedbush notes that the move by Glu to ditch premium games for free-to-play bodes well for its game business and the fruits of the move are already showing. For example, the company’s topline has expanded in the recent years as it shifts to free-to-play strategy.

Guidance

Glu Mobile Inc. (NASDAQ:GLUU)’s management recently lowered 2015 non-GAAP revenue forecast to a range of $234.3-$236.3 million, a step-down from $267-$282 million that it previously guided.

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