UBS raises AppLovin stock price target to $475; maintains buy

Thursday - UBS has increased the price target for AppLovin Corp (NASDAQ:APP) to $475 from the previous $450, while sustaining a Buy rating for the company’s stock. The adjustment follows AppLovin’s first-quarter results, which showcased broad-based strength across its business segments. The company, currently trading at $348.38, has demonstrated impressive revenue growth of 43.44% over the last twelve months. The company reported double-digit quarter-over-quarter growth in gaming advertisement revenue, improved Advertising EBITDA margins, and an estimated $55 million quarter-over-quarter increase in web-based advertisement revenue.

In response to these outcomes, UBS has revised its forecast for AppLovin’s fiscal year 2026 EBITDA, raising the estimate by 7.4% to $6.1 billion. This revision reflects an expected increase in web-based advertisement revenue, which UBS now estimates to grow by $348 million to $1.65 billion. The revision is partly due to the anticipated faster rollout of AppLovin’s self-service advertisement platform. According to InvestingPro data, the company’s current EBITDA stands at $2.32 billion, with analysts maintaining a strong consensus recommendation of 1.63 (where 1 is Strong Buy).

The UBS analyst noted that while the transition to a self-service model does not guarantee sustained rapid revenue growth, AppLovin’s acknowledgment of experimenting with exclusionary targeting signals a readiness to respond to advertiser demands. Although it is early in the product’s lifecycle to implement such features, this approach is expected to attract further demand from new advertisers. InvestingPro analysis reveals the company maintains a healthy financial position with a current ratio of 2.19 and operates with a moderate level of debt.

AppLovin’s strategic moves to enhance its advertising platform come at a time when the company is experiencing significant growth in its gaming advertisement segment. The company’s ability to improve its EBITDA margins while expanding revenue streams is a positive sign for investors.

The stock market is likely to monitor AppLovin’s progress closely, especially as the company continues to innovate and potentially disrupt the web-based advertising industry. With the raised price target and sustained Buy rating, UBS signals confidence in AppLovin’s growth trajectory and financial outlook.

In other recent news, AppLovin Corp has been the focus of several analyst updates following its first-quarter earnings report. The company reported robust results, with a notable 16% quarter-over-quarter increase in its advertising segment and an 81% adjusted EBITDA margin, as noted by Oppenheimer. Piper Sandler raised its price target for AppLovin to $455, highlighting the company’s strong performance across gaming and non-gaming sectors. BTIG also increased its price target to $471, citing the company’s ability to surpass estimates and maintain growth momentum.

Benchmark analysts maintained a Buy rating with a target of $525, focusing on AppLovin’s strategic divestiture of its Apps division to enhance its advertising platform. Goldman Sachs lifted its price target to $435, attributing the revision to AppLovin’s first-quarter earnings beat and improved operating estimates. Analysts from these firms emphasize the potential for growth through upcoming initiatives like the self-serve platform and international expansion. The divestiture of the lower-margin Apps segment is expected to streamline operations and improve financial outcomes.

AppLovin’s management is optimistic about future growth, particularly in the non-gaming advertising sector, which is anticipated to represent over 10% of total advertising revenue this year. Despite different price targets, the consensus among analysts is positive, with expectations of continued revenue growth driven by new verticals and strategic changes.

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