On Tuesday, Wolfe Research initiated coverage on Match Group (NASDAQ:MTCH) with an Outperform rating and a price target of $36.00. The firm believes that Match Group, known for its online dating services, may have reached a turning point with its Tinder platform, as the decline in the number of paying users could potentially reverse later in the year. This optimism is based on the company's recent product and marketing efforts.
The research firm also highlighted the rapid expansion of Hinge, another dating service under the Match Group umbrella, which is increasingly contributing to the company's revenue and profits on a global scale. The current valuation of Match Group, trading at approximately 13 times its projected 2025 earnings per share (EPS), is considered attractive by the firm.
The price target of $36 is based on a blend of forward price-to-earnings (P/E) and enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiples, set at 15 times and 8 times respectively.
These multiples align with the median of Match Group's comparable companies. Wolfe Research's valuation takes into account the potential for mid-teens earnings growth, driven by ongoing stock buybacks and modest margin expansion. The firm's assessment comes as Match Group's shares are trading at a notable discount compared to the five-year historical median multiple of 31.1 times the 2025 EPS.
According to Wolfe Research, Match Group's stock performance and future outlook appear to be on a positive trajectory, as the company's strategic initiatives begin to bear fruit. The analyst's commentary suggests confidence in the company's capacity to overcome previous challenges and capitalize on its market position.
InvestingPro Insights
Match Group (NASDAQ:MTCH) has been the subject of recent analysis by Wolfe Research, and additional insights from InvestingPro further illuminate the company's financial health and strategy. Match Group's aggressive share buyback initiative is a strategic move that underscores management's confidence in the company's value. This is an important consideration for investors, as share repurchases can enhance earnings per share over time. Additionally, with a Piotroski Score of 9, Match Group demonstrates strong financial health, which is a composite measure of nine criteria used to assess the firmness of a company's financial position.
InvestingPro data indicates that Match Group has a market capitalization of $8.51 billion and is trading at a P/E ratio of 13.37, which adjusts to 13.01 for the last twelve months as of Q1 2024. This valuation is noteworthy as it suggests the company is trading at a low P/E ratio relative to near-term earnings growth, a factor that may have contributed to Wolfe Research's optimistic outlook. Moreover, Match Group's revenue growth has been solid, with an 8.17% increase over the last twelve months as of Q1 2024, further highlighting the company's expanding business.
For investors seeking a deeper dive into Match Group's financials and strategic positioning, InvestingPro offers additional InvestingPro Tips that can provide a comprehensive understanding of the company's outlook. There are currently 6 more tips available that shed light on aspects such as earnings revisions, profitability projections, and liquidity status. To access these valuable insights and make informed decisions, investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/MTCH.
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