BTIG has raised its price target for AppLovin Corp (NASDAQ: NASDAQ:APP), a mobile technology company, from $114 to $150, while maintaining a Buy rating on the stock.
The firm's decision follows recent meetings with AppLovin's management team in New York, which gave BTIG a more constructive view of the company's competitive position and future growth potential.
AppLovin's management, including CEO Adam Foroughi, expressed confidence in the company's ability to significantly impact performance into 2025 and beyond.
The company's scale and data were highlighted as key competitive advantages that not only strengthen its current market position but also facilitate the growth of new business ventures.
The mobile technology firm, which boasts 1.4 billion daily active users (DAUs) on its MAX exchange and serves billions of ad impressions daily, sees a vast potential for increasing its conversion rates.
Currently, only about 1% of impressions lead to installs and revenue, but the company anticipates this could grow to approximately 5%. The improvement is expected to come from the continuous integration of over 1 trillion data points annually back into their models, enhancing performance.
BTIG's revised price target reflects a more explicit and slightly conservative set of assumptions for the growth of AppLovin's gaming business, its existing non-gaming business, and the expansion into commerce.
The firm also adjusted its EBITDA estimates to more accurately account for the minimal incremental variable costs associated with supporting growth, outside of periodic increases in GPU costs.
InvestingPro Insights
Following BTIG's optimistic outlook on AppLovin Corp (NASDAQ: APP), real-time data from InvestingPro supports the company's strong growth narrative. With a market capitalization of $35.3 billion and a notable revenue growth of 37.31% in the last twelve months as of Q2 2024, AppLovin's financial health appears robust. The company's gross profit margin stands at an impressive 71.8%, indicating efficient operations and a strong ability to turn revenue into profit.
InvestingPro Tips suggest that management's aggressive share buyback program and the expectation of net income growth this year could signal confidence in the company's future. Analysts also anticipate sales growth in the current year, aligning with BTIG's positive stance. With the stock trading near its 52-week high and a significant return over the past year, investors may find AppLovin's growth trajectory compelling. It's worth noting, however, that the stock is currently in overbought territory according to the RSI, which could indicate a potential pullback. For those looking to delve deeper, InvestingPro offers additional insights and tips, with a total of 20 InvestingPro Tips available for AppLovin at https://www.investing.com/pro/APP.
InvestingPro Data also reveals a high Price / Book multiple of 43.32, which may suggest the stock is trading at a premium compared to its book value. The company's strong performance is reflected in its one-year price total return of 158.78%, showcasing significant investor gains. With the next earnings date set for November 6, 2024, market participants will be keen to see if AppLovin can maintain its momentum and meet the high expectations set by analysts and its own management team.
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