Value Funds Eye Substantially Undervalued Firms In Rising IPO Market
By Takeover Analyst:With Facebook (FB) looking to IPO some time this month, the attraction towards high-growth ventures and first mover advantage is likely to reach local highs. Zynga (ZNGA) trades at around 5.4x 2011 revenue versus 5.1x for Google (GOOG). For a company well positioned in a market with high secular trends, Zynga appears relatively undervalued. Assuming Zynga can grow operating cash flow 30% annually off of 70.9% and 19.2% growth in FY2010 and FY2011, respectively, and the multiple falls 30%, valuation would come in at $12.2B by 2015. Analysts are expecting around 23.3% per annum growth for Zynga over the next half decade, so the margin of safety is stronger than what some of the bears would have you believe.From a theoretical perspective, however, IPOs in the financial and real estate sectors have even greater upside than those in technology and social media, which have already been buoyed by pressComplete Story »
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