On Friday, Bumble Inc. (NASDAQ:BMBL) received an upgrade from BofA Securities, shifting its stock rating from Neutral to Buy. The dating service provider's price target was set at $14.00, as BofA Securities expressed confidence in Bumble's potential to meet or surpass market expectations, which could lead to an expansion of the company's stock multiple.
The optimism stems from Bumble's recent performance, where it exceeded Wall Street's revenue estimates for the first quarter, marking a notable achievement after missing these targets in the previous two quarters. Furthermore, Bumble's EBITDA has consistently outperformed, coming in above expectations in four of the last five quarters.
Looking ahead, consensus revenue estimates for the fiscal year 2024 are 0.80% below the guidance's midpoint, which anticipates a year-over-year growth of 8-11%. The analyst also highlighted the positive impact of an expanded share repurchase program on Bumble's valuation.
Currently, Bumble's valuation is at 6.4 times its estimated 2025 enterprise value to EBITDA (EV/EBITDA). This valuation is considered significantly lower compared to its projected growth rates of 9.6% and 15.8% in 3-year revenue and EBITDA compound annual growth rates (CAGRs), respectively. In comparison, its competitor Match trades at 8.4 times EV/EBITDA, and the average for consumer subscription companies stands at 16.4 times.
In light of these factors, BofA Securities has slightly raised its estimates for Bumble, maintaining a price objective of $14.00 based on a 7 times multiple of the company's projected 2025 EV/EBITDA.
InvestingPro Insights
As Bumble Inc. navigates a dynamic market, InvestingPro data indicates a market capitalization of $1.97 billion and a high price-to-earnings (P/E) ratio of 66.3, reflecting investor expectations for future growth. The company's revenue growth remains robust, with a 14.98% increase over the last twelve months as of Q1 2024. This aligns with BofA Securities' positive outlook, reinforcing the potential for Bumble's stock multiple to expand. Additionally, Bumble's gross profit margin stands at an impressive 70.51%, showcasing the company's ability to maintain profitability amidst its growth trajectory.
InvestingPro Tips highlight that Bumble's management has been actively buying back shares, signaling confidence in the company's prospects. Moreover, the company is expected to be profitable this year, with net income anticipated to grow. These factors, combined with a significant return over the last week of 12.92%, present an optimistic picture for potential investors.
For those seeking more detailed analysis and additional insights, InvestingPro offers 11 more tips on Bumble Inc. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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