On Monday, Evercore ISI initiated coverage on Life360 (NASDAQ:LIF) stock with an Outperform rating and a price target of $37.00. The firm's positive outlook is based on the company's performance and potential within the family- and location-tracking market, citing a strong customer base and a profitable business model.
Life360 operates a consumer platform that helps users locate family, pets, and valuable items. The platform, which has a freemium model with various subscription tiers, serves a highly engaged customer base with 66.4 million monthly active users (MAUs) across the U.S., U.K., Canada, and Australia. Life360's revenue streams come from both subscription services and hardware sales, including products from its brands Life360, Tile, and Jiobit.
The company's revenue in 2023 reached $305 million, marking a 33% year-over-year increase. This financial success is attributed to robust gross margins at 73% and adjusted EBITDA margins at 7%, alongside positive free cash flow.
The analyst's valuation is derived from a blend of 7x EV/Sales multiple on the 2025 revenue estimate of $452 million and a 40x EV/EBITDA multiple based on the 2025 EBITDA estimate of $66 million.
Evercore ISI's long thesis for Life360 is grounded in the belief that the company has cemented its leadership in the market through its subscription model and proprietary hardware.
The analyst's confidence is supported by a proprietary survey of 500 users and industry checks, which reinforce the platform's value proposition, particularly in use cases such as location alerts and driver monitoring for teen drivers.
Despite the optimistic outlook, the firm acknowledges that the biggest risk for Life360 is the possibility of large, well-capitalized competitors entering the space. However, the current analysis suggests that Life360 holds a multi-year lead over its competitors in the market.
In other recent news, Life360, a family technology and safety platform, received a Buy rating from Canaccord Genuity, with a price target set at $40.00. The company, boasting over 66 million global users, operates on a Freemium model, converting a significant portion of U.S. and international users into paying members. Recent developments show that Life360 is exploring future opportunities in sectors including auto insurance, elderly monitoring, and family financial planning.
Canaccord Genuity's outlook for Life360 is positive, with a focus on the company's low penetration rates, demographic trends favoring growth, and the expansion of the triple-tier membership model. The firm's analysis indicates that Life360's recurring revenue model and potential for increased penetration and monetization justify a premium valuation.
The expectation is for sustained revenue growth and margin expansion over time. These recent developments reflect the company's continual efforts in expanding its services and enhancing its revenue streams.
InvestingPro Insights
Recent data from InvestingPro underscores the potential that Evercore ISI sees in Life360 (NASDAQ:LIF), with several metrics indicating a strong financial posture and market performance. Notably, Life360's revenue has shown impressive growth, with the last twelve months as of Q1 2024 reporting a 28.16% increase, reaching $314.6 million USD. This growth is supported by a robust gross profit margin of 74.05%, signaling efficient operations and a solid business model.
InvestingPro Tips highlight that Life360 is expected to grow its net income this year, bolstering the analyst's positive stance. Additionally, the company has recently demonstrated a significant return, with an 11.16% price total return over the last week, which aligns with the strong performance over longer periods, including the last three months and the last year. These returns reflect investor confidence and market momentum for Life360. Moreover, Life360 operates with a moderate level of debt and has liquid assets that exceed its short-term obligations, providing financial stability.
For investors looking for more detailed analysis and additional insights, InvestingPro offers a comprehensive list of tips for Life360. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to valuable information that can inform investment decisions. With InvestingPro, users can explore a wealth of data and expert tips, including 12 additional tips for Life360, to better understand the company's prospects and performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.