Angry Birds maker suffers blow after Deutsche Bank slashes target

STOCKHOLM— The company behind the Angry Birds game just suffered another body blow as analysts at Deutsche Bank told clients the stock is probably worth only a third of its initial public offering price. Rovio Entertainment, which lost half its value in a single-day selloff last month, has continued to sink in March. After losing about 9 per cent on Friday, it dropped almost 8 per cent in Helsinki on Monday.

The stock sold for11.50 euro a piece in a September IPO. But less than half a year later, Rovio shares are only worth 3.70 euro, according to Deutsche Bank. It’s the biggest single downgrade yet for the Finnish company, and 60 per cent below Deutsche’s previous price target.

The main concern is that Rovio, which lost its games head a week after shocking the market with a profit warning, doesn’t have much else besides Angry Birds to make money from. There are also questions as to whether manage- ment has figured out how to turn a profit on its business model.

Mathias Lundberg, an analyst at SEB AB in Stockholm, says Rovio isn’t converting “enough players to payers.” The company did well in the past two years, “but now seems to have hit the buffers,” he said in a client note. SEB cut its price estimate by 9 per cent to 5 euros ($8 Canadian), and also slashed its target for earnings per share this year and next by more than 30 per cent.