UPDATE: Bank of America Raises PT on Renren Following Mobile Game Launch Delay

In a report published Friday, Bank of America analyst Eddie Leung reiterated a Neutral rating on Renren (NYSE: RENN), and raised the price target from $3.50 to $3.90.

In the report, Bank of America noted, “2Q sales missed midpoint of guidance by 11% mainly due to delays of several Android based smartphone games. We believe that it not only impacts upcoming quarters' results, but also reflects increasing competition among numerous mobile game developers as the industry is becoming very crowded. We are modeling games, which include existing web-based games, to be largely flat in 2013 and up 13% YoY in 2014, and its contribution to sales to decrease from 51% in 2012 to 40% in 2014. Online advertising continued to be weak, due to traffic shift from PC to mobile as well as flat user growth. While Renren added 10m activated users in 2Q, monthly active users decreased by 5% QoQ, the first time in history. Nuomi (groupbuy) and Woxiu (video shows) are still growing rapidly, yet the profitability is yet to prove. The company reiterates its commitment to and long-term view on groupbuy business. We believe there are opportunities for consolidation and strategic partnerships in the groupbuy business and see development of its groupbuy business as an upside risk.”

Renren closed on Thursday at $3.72.