Shanda Games Shares Popped: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese online-gaming specialist Shanda Games (NAS: GAME) climbed 12% on Thursday after a Wall Street analyst upgraded the stock to a buy.

So what: Along with the upgrade, Deutsche Bank offered a price target of $6.41 on the shares, representing about 30% worth of upside to its Wednesday close. Shanda has been beaten down on worries that it just doesn't have enough brand power in the pipeline, but with legacy games Mir 2 and Woool continuing to deliver strong results, Deutsche believes those concerns are way overblown.

Now what: Shanda might be worth keeping an eye on. Shanda's fight to regain the market share it lost to Tencent Holdings and NetEase (NAS: NTES) will certainly be a tough one, but with a P/E below 7 and some operating momentum on its side, the stock seems worth the risk. Of course, given its status as a Chinese penny stock, expect plenty of volatility along the away.

Interested in more info on Shanda?Add it to your watchlist.

At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of NetEase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.