UPDATE: Piper Jaffray Lowers PT on Zynga on Significant Workforce Reduction

In a report published on Tuesday, Piper Jaffray analyst Michael Olson lowered the price target on Zynga (NASDAQ: ZNGA) from $3.50 to $3.35 and maintained a Neutral rating.

In the report, Piper Jaffray noted, "Zynga announced an 18% workforce reduction yesterday afternoon that is expected to cut $70 to $80 million in annualized operating expenses. A material reduction was largely expected given the epic deterioration in bookings observed since Q1'12, Unfortunately, we view Zynga's new headcount near ~2,380 as still significantly over extended vs. its realistic bookings run-rate (see table on page 2). Yesterday's announcement also included disappointing guidance commentary including Q2 bookings in the lower half of the prior guidance and reaffirmed 2013 EBITDA margin of 0%-10%, which implies a material reduction in bookings expectations in our view (given incremental cost reductions). We continue to view Zynga with caution as the company balances the conflicting priorities of building an innovative game pipeline and reducing costs dramatically to keep pace with the deterioration in bookings. We are reducing our price target to $3.35 based on 13x our new '14 EBITDA est. of $123m."

Zynga closed on Monday at $2.99.