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On Thursday, Goldman Sachs analyst Eric Sheridan updated the financial outlook for AppLovin Corp (NASDAQ: NASDAQ:APP), raising the 12-month price target to $435 from the previous $335 while keeping a Neutral rating on the shares. Sheridan’s assessment follows a review of the company’s first-quarter performance and updated forward-looking statements. According to InvestingPro data, two analysts have recently revised their earnings upward for the upcoming period, with analyst targets ranging from $200 to $650.
The analyst’s commentary highlighted expectations for near-term investor discussions to focus on whether the forward estimate revision cycle is reflected in the current share price, with the company’s market capitalization now at $102.68 billion. Sheridan noted that the current debate is less about the company’s core advertising business and its scalability, and more about the stock’s valuation. Current metrics from InvestingPro show the stock trading at a P/E ratio of 64 and an EV/EBITDA multiple of 45.4, suggesting rich valuations relative to peers. For comprehensive valuation analysis and more insights, check out the detailed Pro Research Report available on InvestingPro, covering what really matters for this high-growth tech stock.
Goldman Sachs’ positive long-term outlook for AppLovin is based on the company’s ability to outperform the average growth of the advertising and marketing industry. The firm anticipates that AppLovin’s diverse business portfolio will continue to yield strong margins in the normalized mobile ads and mobile gaming market. This optimism appears well-founded, as InvestingPro data shows impressive revenue growth of 43.4% in the last twelve months, along with a robust gross profit margin of 75.2%. The company’s overall financial health score stands at "GREAT," supported by strong profitability and growth metrics.
The increase in the price target to $435 is attributed to several factors, including an upward revision of core operating estimates in light of AppLovin’s first-quarter earnings beat and the company’s guidance. Additionally, a decrease in stock-based compensation, which was adjusted to use the first quarter as a new normalized rate, contributed to the revised target.
Despite the substantial increase in the share price over the past year, with AppLovin’s stock climbing over 333% compared to the S&P 500’s 8.5% gain, Goldman Sachs maintains a Neutral stance. The firm cites a balanced risk/reward scenario for the current shares based on the trailing twelve-month performance.
In other recent news, AppLovin Corp has reported impressive financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share of $1.67, exceeding the forecast of $1.43, and generated revenue of $1.48 billion, outpacing the anticipated $1.38 billion. Revenue saw a significant year-over-year increase of 40%, reaching $1.5 billion, while adjusted EBITDA rose by 83%, highlighting effective cost management. Additionally, the company reported a free cash flow of $826 million, marking a 113% increase year-over-year.
In another development, Jefferies analyst James Heaney raised the price target for AppLovin to $530, up from $460, maintaining a Buy rating. Heaney cited the company’s robust 71% year-over-year advertising revenue growth and the potential for further market expansion with new self-serve capabilities. AppLovin’s second-quarter revenue guidance suggests a quarter-over-quarter increase of approximately 4-5%, which Heaney believes might be conservative given the rollout of new tools. These recent developments underscore AppLovin’s strong growth trajectory and strategic focus on AI-driven advertising and web expansion.
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