On Tuesday, BTIG increased its price target for AppLovin Corp (NASDAQ: NASDAQ:APP) shares to $87 from the previous target of $65 while maintaining a Buy rating on the stock. The firm's analyst noted substantial year-to-date gains in AppLovin's stock and addressed questions about the company's setup into earnings and the sustainability of its fundamental momentum throughout the year.
Investors' attention has been drawn to AppLovin's growth prospects in the second half of 2024, especially with the Axon 2.0 launch anniversary approaching. BTIG highlighted two key elements that are currently undervalued by the market: the potential for further growth in the core gaming market and the strategic moves AppLovin has made to bolster its chances of success in the eCommerce sector.
BTIG forecasts that AppLovin's expansion of its customer base and increased capture of the gaming advertisement market could lead to more than 40% Software revenue growth in 2024, with a 20% exit rate in the fourth quarter.
Moreover, with a modest penetration into the eCommerce advertisement market projected between 2025 and 2028, and a stable gaming market share, AppLovin is expected to sustain a low to mid-teens Software revenue growth rate. This growth trajectory is anticipated to surpass consensus expectations for the subsequent years.
The firm took a closer look at AppLovin's Software business, breaking down AppDiscovery revenue between gaming and non-gaming sources and outlining market share trends that support the updated base case scenario.
BTIG provided insights into the eCommerce opportunity for AppLovin, explaining the potential for the company to scale a new business within this channel, and shared findings from their latest channel checks.
Analyst remains positive on AppLovin's current position and prospects, emphasizing that the company continues to be a top pick at the firm. The raised stock price target reflects an optimistic view of AppLovin's improving fundamental outlook.
InvestingPro Insights
As AppLovin Corp (NASDAQ: APP) continues to capture investor interest with its robust growth trajectory and strategic market moves, it's worth taking a closer look at some key financial metrics and insights provided by InvestingPro.
The company's market capitalization stands at a solid $25.71 billion, and while it trades at a high P/E ratio of 76.48, the adjusted P/E ratio for the last twelve months as of Q4 2023 is slightly lower at 66.25. This suggests a potentially more favorable valuation when considering the company's recent earnings. A noteworthy PEG ratio of 0.25 for the same period indicates that AppLovin's earnings growth may not be fully reflected in its current share price.
InvestingPro Tips highlight that management has been actively buying back shares, which can be a signal of their confidence in the company's value. Moreover, with a substantial return of 396.5% over the last year and the stock trading near its 52-week high at 99.69% of that value, the momentum behind AppLovin is evident. For those considering an investment, the company's next earnings date is set for May 8, 2024, which could provide further insights into its performance and future potential.
For more detailed analysis and additional tips, investors can explore InvestingPro, which offers 19 more InvestingPro Tips for AppLovin. To enhance your investing strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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