On Wednesday, Macquarie maintained its Outperform rating on AppLovin Corp (NASDAQ:APP) while increasing its price target to $150 from the previous $115.
The firm highlighted that the stock had surpassed the earlier target price, closing on Tuesday at $126 following a wave of sell-side upgrades and target price hikes over the past two weeks. According to Macquarie, there has been little news to directly fuel this surge, but the firm believes the rally is justified when comparing AppLovin to The Trade Desk (NASDAQ:TTD), noting similarities in their ad tech leadership.
Macquarie emphasized AppLovin's significant growth and higher margins, pointing out that AppLovin trades at 16 times its projected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), which is substantially lower than The Trade Desk's 45 times multiple. The firm also remarked on the stock's performance since its initial public offering (IPO), stating that while AppLovin's stock has increased 12-fold from its early 2023 low, it has only risen 58% since its 2021 IPO. In contrast, The Trade Desk has experienced a 60-fold increase since its 2016 IPO.
The analyst from Macquarie reiterated the Outperform rating, supporting the decision with observations of AppLovin's robust growth trajectory and what they consider a moderate valuation relative to forward estimates and the overall market potential. The new price target suggests a confidence in the ongoing success and market position of AppLovin in the competitive ad tech sector.
AppLovin's performance and the favorable outlook from Macquarie come at a time when the company has demonstrated a strong presence in the advertising technology industry.
In other recent news, AppLovin Corporation has been the subject of multiple analyst upgrades and target price adjustments, reflecting a positive outlook for the company's growth trajectory.
Citi, UBS, BTIG, and BofA Securities all maintained buy ratings for AppLovin, with Citi raising its price target for the company's shares to $155, citing increased confidence in AppLovin's potential for software revenue growth. UBS upgraded the company's stock from Neutral to Buy, and increased the price target to $145.00, citing improved visibility into medium-term revenue growth.
BTIG raised its price target for AppLovin from $114 to $150, following meetings with the company's management team, which gave the firm a more constructive view of the company's competitive position and future growth potential. BofA Securities also adjusted its outlook, increasing the company's price target to $120 from the previous $100 while maintaining a Buy rating, based on the expectation that AppLovin's Software segment will sustain high growth rates through 2026.
Despite these positive assessments, Benchmark maintained a sell rating, while raising its price target to $66 from the previous $48. The firm cited reduced revenue leverage and the impact of lower user acquisition spending in the App segment as potential challenges.
AppLovin's recent financial results have shown strong performance, with Q2 revenue increasing by 44% to reach $1.08 billion. The company's future guidance predicts Q3 revenue between $1.115 billion and $1.135 billion, and adjusted EBITDA ranging from $630 million to $650 million.
InvestingPro Insights
AppLovin Corp's (NASDAQ:APP) recent performance has caught the eye of investors and analysts alike. With a market capitalization of $43.43 billion and a strong revenue growth of 37.31% over the last twelve months as of Q2 2024, the company's financial health appears robust. The impressive gross profit margin of 71.8% further supports the optimistic outlook provided by Macquarie, reinforcing the company's efficiency in generating income relative to its revenue.
InvestingPro Tips highlight that AppLovin's management has been actively buying back shares and that net income is expected to grow this year. These strategic moves could be indicative of the company's confidence in its financial future and align with the positive sentiment from Macquarie's analysis. Moreover, the stock's recent price uptick, with a 1-month total return of 43.1% and a 3-month return of 58.95%, underscores the market's response to its growth trajectory. It's worth noting that AppLovin is trading near its 52-week high, at 99.9% of this threshold, which could suggest a strong market belief in the company's value and potential for further growth.
For those intrigued by the recent surge in AppLovin's stock and considering an investment, exploring the additional 19 InvestingPro Tips available at InvestingPro could provide a deeper understanding of the company's financial nuances and market position.
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