On Tuesday, Wolfe Research initiated coverage on Bumble Inc. (NASDAQ:BMBL), assigning an Outperform rating with a price target (PT) of $14.00. The research firm's optimism is rooted in the company's strategic direction under new leadership, including product innovation and international expansion efforts.
The analyst from Wolfe Research highlighted the steps Bumble is taking to rejuvenate its app, focusing on international expansion, app localization, and the introduction of features that resonate with Generation Z. These initiatives are expected to drive double-digit percentage revenue growth and continue to capture market share.
The positive outlook is also supported by the company's financial valuation. Bumble's current valuation stands at 8.4 times its estimated 2025 earnings per share (EPS), which Wolfe Research finds appealing. The firm projects a mid-teens earnings before interest, taxes, depreciation, and amortization (EBITDA) compound annual growth rate (CAGR) over the next three years.
The $14 price target for Bumble is based on a combination of forecasted 2025 price-to-earnings (P/E) and enterprise value to EBITDA (EV/EBITDA) multiples of 12.5x and 7.0x, respectively. These multiples are below the median of comparable companies, suggesting a conservative and reasonable valuation given the anticipated growth in the number of paying users and margin expansion.
Wolfe Research's valuation contrasts with Bumble's current trading multiples, which are significantly lower than the company's long-term historical median. Bumble shares are trading at 5.3 times its projected 2025 EBITDA and 8.4 times the projected 2025 EPS, compared to historical medians of 17.1x and 86.4x, respectively.
InvestingPro Insights
Turning the spotlight on Match Group, Inc. (NASDAQ:MTCH), a peer in the online dating sector, we find insightful metrics that could provide additional context to the industry's landscape. Match Group, with a market cap of $8.51 billion, is trading at a P/E ratio of 13.37, which adjusts to 13.01 when looking at the last twelve months as of Q1 2024. This valuation is notably low when paired with the company's near-term earnings growth, suggesting an attractive investment proposition. Moreover, the company's PEG ratio during the same period stands at a mere 0.11, indicating potential for growth relative to its earnings trajectory.
InvestingPro Tips for Match Group reveal a robust financial health and strategic management actions. Match Group has a perfect Piotroski Score of 9, reflecting strong fiscal conditions and operational efficiency. Additionally, management's aggressive share buyback program underlines their confidence in the company's value. It is also worth noting that while analysts have revised their earnings expectations downwards for the upcoming period, the company's liquid assets surpass its short-term obligations, and profitability is anticipated for this year. Match Group does not pay a dividend, which may appeal to investors looking for companies that reinvest earnings back into growth initiatives.
For readers seeking a deeper dive into Match Group's financials and strategic outlook, InvestingPro offers additional insights. With a subscription, users can access a comprehensive list of tips that further elaborate on the company's performance and potential. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover the full range of InvestingPro Tips available for Match Group at https://www.investing.com/pro/MTCH.
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