On Thursday, Citi adjusted its price target for Match Group (NASDAQ:MTCH), a leading provider of dating products, to $32 from the previous $33, while keeping a neutral rating on the stock. The decision came after attending Match Group's Investor Day, where the company presented its product development plans aimed at addressing growth challenges for the fourth quarter of 2024 and into 2025, which were below market expectations.
The company's mid-term outlook offered limited optimism, and the Citi analyst expressed a mixed reaction to the presentations. Although the guidance for margin expansion aligned with forecasts, the revenue performance at Tinder, one of Match Group's key services, did not meet expectations.
The analyst acknowledged Match Group's efforts to recalibrate expectations amid monthly active user (MAU) headwinds, considering it a cautious move. However, the potential growth is contingent upon the successful implementation of a product roadmap that heavily incorporates artificial intelligence (AI).
Match Group also indicated a shift toward becoming more of a value stock, as evidenced by its commitment to return 100% of its free cash flow (FCF) to shareholders and the initiation of a dividend. While improvements in margins and capital management could support solid earnings per share (EPS) growth, the lingering uncertainties around growth prospects suggest that the stock is currently reasonably priced, according to the Citi analyst.
The company's future performance now largely depends on how effectively it can execute its AI-driven product strategy and whether this can translate into tangible growth, a factor that investors and analysts alike will be watching closely.
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