Deutsche Bank Takes Shanda Games To Hold (SNDA, GAME, CYOU, NCTY, GIGM, PWRD)
2009 Shanda Interactive Entertertainment (SNDA) spinoff Shanda Games Limited (GAME) has been the focus of the Chinese online gaming segment of late following the company’s second-quarter earnings report, a strategic acquisition, and some related commentary from analysts. This morning Deutsche Bank downgraded the stock to Hold from Buy, citing the “faster-than-expected aging of its two flagship games,” which represent about 75% of the company’s revenue.
After the bell on Wednesday, Shanda Games said its profits slipped by -16% in the second quarter, and net revenue was off by -4%. The 16-cent profit per American depositary share was in line with analyst consensus. The firm also announced plans to acquire Eyedentity Games, a Korean development studio, for about $95 million in cash.
As a whole, the Chinese Online Gaming Stocks Index lagged the S&P 500 by -3% in the month ended Thursday’s close. Shanda Games is the Index’s worst performer for the period, sliding by more than -20%, compared to less than -10% declines by next-worst Changyou (CYOU), another 2009 gaming spinoff.
Elsewhere in the sector, The9 Limited (NCTY), Gigamedia (GIGM), and Perfect World Co (PWRD) hung onto one-month gains as of Thursday’s closing bell, but all three are giving some back in today’s session.
Investors can track the Chinese Online Gaming Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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