Shares of AppLovin Corp. (NASDAQ:APP), a provider of software for app discovery and app monetization, climbed after the company’s stock was upgraded from “Neutral” to “Buy” at Bank of America, with a price target of $27.
Research analysts at the bank pointed to a pricing surge in the first quarter. In their view, this indicates the company has a machine learning advantage, and this was part of the basis for the now bullish outlook on the company.
The analysts explained, “We upgrade AppLovin to Buy based on the view that its new machine learning engine (Axon 2.0) will accelerate revenue growth in 2023.”
They noted that AppLovin reported that revenue per install rose 48% year-over-year in the first quarter. By contrast, comparable pricing metrics at peer ad networks fell year-over-year.
“We believe that APP’s rising prices are indicative of (1) a machine learning edge in locating high LTV users for app advertisers, (2) market share gains among higher paying advertisers. We expect Y/Y pricing growth in Q2 to persist & advertiser spending momentum to carry through FY23,” concluded the analysts.
AppLovin’s stock climbed by over 5% after the upgrade. Shares are up over 100% year-to-date, but down 40% on a 12-month basis.