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By Michelle Jones

Shares of Glu Mobile Inc. (NASDAQ:GLUU) slumped by more than 16% in regular trading yesterday.

Glu Mobile Inc., the maker of the hit Kim Kardashian game, posted solid results but investors were very unhappy. In connection with the earnings report, the game maker also announced that it is acquiring competitor Cie Games, the maker of Racing Rivals. It will be Glu's entry into the racing game category and also the company's most expensive acquisition so far.

Glu Mobile posts solid results

In a report dated July 30, 2014, Canaccord Genuity analysts Michael Graham and Maria Ripps said Glu had a very strong second quarter and offered "eye-popping" guidance for the third quarter. The company beat estimates for bookings and EBITDA thanks for strength in a number of existing games. Glu also enjoyed five days of revenue from its hit game Kim Kardashian, which did so well that the analysts believe the game is the reason for Glu's strong third-quarter guidance.

Management guided for revenue of between $80 million and $85 million in the third quarter, including between $5 million and $6 million from the Cie Games acquisition. That's compared to the previous guidance of between $37.5 million and $39.8 million for the quarter.

The Canaccord Genuity team thinks Glu Mobile's fourth quarter implied guidance is actually conservative. They say management is not bringing the Kardashian game's placement in the top five into the fourth quarter. The analysts think that the company has a great chance to continue its momentum because it has several new games coming in the second half of the year and has had been successful in integrating acquisitions into its operations in the past.

The good and the bad in Glu Mobile's results

The analysts say the Kim Kardashian game drove Glu Mobile's strong results and that the company's core games DH 14 and EW3 continued performing perform well. They note that the company's third- and fourth-quarter guidance was very strong as well and that Glue is entering the racing category by purchasing Cie Games.

On the bearish side, they say the fourth-quarter guidance still implies "significant sequential deceleration," although they again said that it could be conservative. Also they didn't like the lower gross margin expectation for the second half of the year.

The Canaccord Genuity team increased their price target for Glu Mobile from $5.50 to $8 per share. They also increased their bookings estimate for the 2014 fiscal year from $161 million to $232 million and their non-GAAP earnings per share estimate from 3 cents to 21 cents per share. For the 2015 fiscal year, their estimates go from $190 million to $294 million for bookings and from 9 cents to 18 cents per share in non-GAAP earnings.

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Disclosure: None.

Source: Glu Mobile Inc. Price Target Boosted On Kim Kardashian