On Thursday, Citi demonstrated a bullish stance on AppLovin Corp (NASDAQ:APP) by raising its price target for the company's shares to $155, up from the previous $110. The firm continues to recommend a Buy rating for the stock. The adjustment reflects Citi's increased confidence in AppLovin's potential for revenue growth in its software division.
Citi's optimism is based on the belief that AppLovin has several avenues to achieve its projected software revenue growth of 20% to 30%. These pathways include gaining additional market share in mobile gaming advertisement spending, increasing take rates, and the possibility of expanding into the ecommerce advertising market.
The analyst at Citi underscored the company's growth prospects by stating, "With multiple paths for APP to achieve its software revenue growth target, we are raising our estimates and target price to reflect our confidence in the firm and its potential growth trajectory."
The maintained Buy rating suggests that Citi's outlook on AppLovin remains positive, expecting the company to perform well in the near future. The new price target of $155 represents a significant increase from the prior target, indicating a strong conviction in the company's growth strategy and revenue-generating capabilities.
In other recent news, AppLovin Corporation witnessed a notable surge in its Q2 financial results with a 44% increase in revenue, reaching $1.08 billion, and an 80% rise in adjusted EBITDA to $601 million. 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.
UBS, BTIG, and BofA Securities have all expressed confidence in the company's growth, upgrading their price targets and maintaining buy ratings. UBS anticipates a 20% two-year revenue compound annual growth rate for AppLovin, while BTIG recognizes the company's competitive position and future growth potential.
BofA Securities expects AppLovin's Software segment to sustain high growth rates, exceeding 20% year-over-year, through 2026. However, Benchmark maintains a sell rating despite raising its price target, citing reduced revenue leverage and the impact of lower user acquisition spending in the App segment as potential challenges.
InvestingPro Insights
Enhancing the perspective provided by Citi's bullish stance, InvestingPro data illustrates a robust financial framework for AppLovin Corp (NASDAQ:APP). The company carries a market capitalization of $41.17 billion, underscoring its significant presence in the industry. A high P/E ratio of 51.19 indicates investor confidence in future earnings, although it also suggests a premium valuation. The substantial Revenue Growth of 37.31% over the last twelve months as of Q2 2024 aligns with Citi's optimism regarding AppLovin's revenue potential.
InvestingPro Tips further complement this view, revealing that management's aggressive share buybacks could be a signal of underlying value seen by those closest to the company's operations. Moreover, the expectation of net income growth this year provides additional support for the positive outlook on AppLovin's financial performance. With these factors in mind, investors may find AppLovin an intriguing option, especially considering the company's strong return over the past year, with a 209.99% price total return.
For those seeking more in-depth analysis, additional InvestingPro Tips are available at https://www.investing.com/pro/APP, offering a comprehensive suite of insights to guide investment decisions.
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