Piper Jaffray is positive on Shanda Interactive (NASDAQ:SNDA) taking their target to $43 from $41 following their recent trip to China, which included several meetings with online gaming management teams and industry contacts, they believe Shanda is tracking ahead of expectations for the current quarter; and out year estimates are overly conservative.
Furthermore the firm believes the company is well positioned to capture additional market share in the rapidly growing China online gaming sector due to improving portfolio, strong execution and increased user base. Firm now expects the online gaming sector to grow at least 40% during CY07 (up from 25%-30% previously) and 25%-30% during CY08. PJ expects the company to be a leading consolidator during this period of rapid industry growth. They continue to believe that Shanda is an excellent play on China.
PJ is increasing CY07 sales/EPS estimates from $309M and $1.65 to $311M and $1.66. In addition, they are taking up CY08 sales/EPS estimates from $370M and $1.85 to $388M and $1.95.
Note of caution: There is some buy interest in SNDA in the pre market but the stock is not responding too well. So be careful out there and adjust your risk accordingly.