TSX runs higher on rate cut expectations
On Thursday, UBS analyst Chris Kuntarich increased the price target for AppLovin Corp (NASDAQ: NASDAQ:APP) to $630 from the previous target of $440, while sustaining a Buy rating on the stock. The revision followed a strong performance in the gaming sector and an impressive fourth-quarter e-commerce adoption. The new target represents significant upside potential from the current stock price of $489.67, though InvestingPro analysis suggests the stock may be trading above its Fair Value.
AppLovin’s recent financial results have been encouraging, with no indication of a slowdown in gaming growth and a robust uptake in fourth-quarter e-commerce revenue, which UBS estimated at $50 million. The company has demonstrated remarkable performance, with revenue growing 43.44% and achieving an EBITDA of $2.32 billion in the last twelve months. Additionally, the first-quarter outlook for incremental EBITDA margin in the core advertising business has shown a quarter-over-quarter improvement. The stock’s stellar performance is reflected in its 729.85% return over the past year.InvestingPro subscribers have access to over 20 additional insights and metrics about AppLovin, including detailed financial health scores and comprehensive valuation analysis.
Kuntarich’s optimism is further bolstered by an upward adjustment of the fiscal year 2026 EBITDA estimate by 15% to $5.75 billion. This update reflects the better-than-anticipated fourth-quarter gaming growth and a swifter e-commerce growth, with the fiscal year 2026 estimate for e-commerce revenue now at $1.25 billion. This new projection aligns with the company’s guidance that e-commerce will account for 10% of Advertising revenue in fiscal year 2025, an increase from UBS’s prior estimate of 6%.
The valuation multiple has been set at 39 times the projected fiscal year 2026 EBITDA, which is in line with the average of AppLovin’s Internet peer group when adjusted for growth. Kuntarich noted the challenge in determining the appropriate premium for AppLovin, given its unique execution capabilities and potential opportunities.
In other recent news, AppLovin Corp has seen several analysts raise their price targets following the company’s impressive fourth quarter performance. Benchmark analyst Miike Hickey increased the price target to $525, citing the company’s significant year-over-year growth in advertising revenue and strong financial health. Similarly, Goldman Sachs analyst Eric Sheridan raised the price target to $500, emphasizing the company’s strong advertising revenue and advancements in their AXON 2.0 technology.
Piper Sandler analyst James Callahan and BofA Securities analyst Omar Dessouky also raised their price targets to $575 and $580 respectively, both noting the company’s strong execution in both gaming and non-gaming sectors. BTIG analyst Clark Lampen increased the price target to $600, highlighting the company’s overperformance in the last quarter and its expansion into non-gaming sectors.
In addition to these upgrades, AppLovin has announced the sale of its apps business, a strategic move expected to streamline the company’s operations. These are among the recent developments for the company, which has reported a revenue of $1.37 billion for Q4 2024, surpassing estimates and reflecting a 73% year-over-year growth in advertising revenue.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.