Glu Mobile (Nasdaq: GLUU) Spikes; Is The Company A Takeover Target?

Tallahassee, FL 3/28/12 (StreetBeat) -- Glu Mobile (Nasdaq: GLUU) shares are trading sharply higher Wednesday morning on what would appear to be speculation that the mobile gaming company could be a takeover target.

Last Friday, the stock spiked 21% after Needham analyst Sean McGowan picked up coverage of the mobile gaming company with a Strong Buy rating, asserting that the stock, then trading at $4, could double to $8. ““We believe GLUU’s smart phone growth has been hidden in recent years by the decline of its feature phone revenue, but its new model is based on owned-IP, which is far more profitable,” he wrote. “As the global installed base of smart phones and tablets grows and GLUU’s low-margin feature phone revenues burn off, we expect significant gains in profitability.”

The stock sagged Monday and Tuesday as investors took some profits. But GLUU is revving up again this morning, perhaps in part due to a Seeking Alpha piece posted yesterday by an investor named Chris Katje which asserts that the company is “now the biggest acquisition target in the gaming market.”

Meanwhile, Northland Capital Markets analyst Darren Aftahi this morning repeated his Outperform rating and $7 target on the stock, which he notes is trading at a huge valuation discount to Zynga by most measures. He also notes that the company now has 9 of the top 100 games for the iPad market in China – and that China has now eclipsed the U.S. as the world’s largest market for free apps for the iPad.

GLUU is up 37 cents, or 8.3%, to $4.84.

Note that with a $310 million market cap, Glu would be a bite-sized acquisition for some potential buyers.

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