AppLovin and Dropbox have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 11, 2024 – Zacks Equity Research shares AppLovin Corp. APP as the Bull of the Day and Dropbox, Inc. DBX as the Bear of the Day. In addition, Zacks Equity Research provides analysis on KornFerry International KFY, DLH Holdings Corp. DLHC and Staffing 360 Solutions, Inc. STAF.
Here is a synopsis of all five stocks:
Bull of the Day:
AppLovin Corp. is an app-monetization company that has skyrocketed 375% in the last 12 months to blow away Tech's 44%.
AppLovin crushed Nvidia, Meta, and many others during that stretch, yet it trades 33% below its all-time highs and its valuation levels (which are in line with the tech sector) are improving as its earnings outlook soars.
APP's Bull Case
Wall Street is falling in love with AppLovin because its new AI-enhanced features are boosting ROI for APP's clients, leading to booming sales and earnings for AppLovin.
AppLovin designs tools to help app developers improve marketing, revenue generation, and beyond to boost profitable expansion. APP's products are designed to help companies and app developers acquire and keep their ideal users, increase value across a customer's lifecycle, measure their marketing and reach, and much more.
AppLovin's new machine learning and AI engine AXON 2.0 is generating impressive results for its clients in mobile gaming and beyond. Plus, digital advertising spending has rebounded after its 2022 slowdown.
Growth, Outlook, and EPS Revisions
AppLovin posted 17% revenue growth in 2023. This came against 1% sales growth in 2022, following its whopping 93% expansion in 2021.
AppLovin crushed our Q4 FY23 EPS estimate by 40% and provided upbeat guidance. The firm cited its "MAX bidding enhancements and the market shift to real-time bidding," as well as the rebounding mobile app advertising market as key reasons for its bullish outlook.
AppLovin is projected to post 23% sales growth in 2024 to surge from $3.28 billion to $4.05 billion and then expand by another 10% next year to reach $4.45 billion—a massive jump from 2020's $1.45 billion.
Zacks estimates call for AppLovin's adjusted earnings to soar 153% from $0.98 a share last year to $2.48 a share in 2024 and then climb 22% higher next year to $3.02 a share.
APP's consensus Zacks earnings estimates have soared by roughly 59% for FY24 and 75% for FY25 since its fourth quarter release. AppLovin's most accurate/recent EPS estimate for 2024 came in 14% above the greatly improved consensus, with 2025's figure 22% higher.
APP's upgraded bottom-line outlook helps it earn a Zacks Rank #1 (Strong Buy) right now.
Other Fundamentals
AppLovin went public in April 2021, not too long before tech stocks started to cool and companies such as Meta and others began to suffer from a pullback in digital ad spending.
AppLovin shares have skyrocketed roughly 375% during the past 12 months to blow away Nvidia's 220% and Meta's 140%. This run includes a 90% YTD surge, topping Nvidia's 75% and Meta's 45%.
APP stock trades 33% below its all-time highs from November 2021.
AppLovin stock has pulled back from its 52-week highs and it might slide to its 21-day or 50-day moving averages, especially if the Nasdaq faces selling pressure. Any downturn to those levels likely represent attractive buying opportunities for potential investors and traders.
Turning to valuation, AppLovin trades at a 75% discount to its two-year highs at 29.1X forward 12-month earnings. APP also trades 24% below its two-year median and near the Zacks Tech sector's 26.6X.
Bottom Line
APPLovin helps its clients thrive in a world where countless companies fight for visibility, downloads, screentime, and profitable success in our smartphone and app-obsessed world.
Bear of the Day:
Dropbox, Inc. is a cloud storage firm that has struggled to sustain a strong run ever since its 2018 IPO.
Dropbox stock tumbled following its Q4 2023 release in mid-February as its outlook in a changing industry failed to inspire confidence.
Dropbox 101
Dropbox offers a cloud-based platform that enables businesses and individuals to create, access, and share digital content. Dropbox serves more than 700 million registered users across approximately 180 countries. DBX closed last year with 18.12 million paying users.
Dropbox faces huge competition in the content collaboration platform and cloud storage spaces from some of the biggest companies in the world, including Microsoft and Alphabet. Dropbox announced last year it was streamlining its business and trimming staff to adapt to the artificial intelligence revolution.
Wall Street was always worried about much larger companies eating Dropbox's lunch. Now the firm appears behind the curve on AI, further threatening its near term and long run growth prospects.
Dropbox posted around 8% revenue growth in FY23 and FY22, following a 13% expansion in 2021. The firm is projected to post just 2% sales growth in 2024 and 2.7% higher revenue next year to reach $2.62 billion.
The company's adjusted earnings are projected to pop 1.5% this year. But its consensus estimate for FY25 has fallen by 7% since its Q4 report to help it land a Zacks Rank #5 (Strong Sell).
Bottom Line
Dropbox stock is up 5% in the last five years, including some large peaks and valleys. During this time, the Zacks Tech sector has soared 123%.
DBX tumbled after its Q4 release, washing away its recent stretch of success. Dropbox now trades below its 50-week and 200-week moving averages.
On top of that, Dropbox's balance sheet is hardly robust and not what most tech investors are looking for, with total liabilities outstripping total assets.
It might be best for investors to look elsewhere at the moment.
Additional content:
3 Staffing Stocks in Focus as Labor Market Remains Resilient
The labor market has cooled from its 2023 highs but remains on solid ground, with thousands of jobs being added to the economy every month. Higher consumer spending and a resilient jobs market have posed major challenges for the Federal Reserve in its fight against sky-high inflation.
Higher interest rates have rattled the jobs market. The Bureau of Labor Statistics said on Apr 5 that nonfarm payrolls jumped by 303,000 in March, a lot higher than the consensus estimate of an increase of 200,000. This was also the largest jump since May 2023.
Moreover, job creations remained above the threshold of 100,000 new jobs per month. Hiring was robust across all industries.
Healthcare saw 72,000 new job additions. The government added 71,000 jobs, while new jobs in leisure and hospitality, construction, and retail trade rose by 49,000, 39,000, and 18,000, respectively.
Overall job additions in the first quarter remained impressive. New job additions in January were 259,000, while in February it was 270,000. More importantly, the unemployment rate fell sharply in March. The unemployment rate dropped to 3.8% in March, lower than the consensus estimate of 3.9%.
Our Choices
Given the solid job additions in March and the first quarter, it would be ideal to invest in staffing firms like KornFerry International,DLH Holdings Corp. and Staffing 360 Solutions, Inc.. Each of our picks carries a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.
KornFerry International is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry. KFY provides executive recruitment services exclusively on a retained basis and serves the global recruitment needs of our clients from middle to executive management. KornFerry International'sclients are many of the world's largest and most prestigious public and private companies, middle-market and emerging growth companies as well as governmental and not-for-profit organizations.
KornFerry International's expected earnings growth rate for next year is 13.2%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days.KFY presently sports a Zacks Rank #1.
DLH Holdings Corp. serves clients throughout the United States as a full-service provider of healthcare, logistics and technical support services to DoD and Federal agencies. DLHC's healthcare delivery solutions include professional services, from case management, to health and injury assessment, critical care, medical/surgical, emergency room/trauma center, counseling, behavioral health and trauma brain injury, medical systems analysis, and medical logistics, and several allied support services.
DLH Holdings' expected earnings growth rate for next year is 72.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the past 60 days. DLHC currently has a Zacks Rank #3.
Staffing 360 Solutions, Inc. is engaged in a global buy-and-build strategy through the acquisition of staffing organizations in the U.S. and the UK. Through both organic growth and acquisitions, STAF provides permanent placement services in the finance and accounting, administrative, engineering and IT staffing space.
Staffing 360 Solutions' expected earnings growth rate for the next quarter is 85.7%. The Zacks Consensus Estimate for current-year earnings has improved 38% over the past 60 days. STAF currently carries a Zacks Rank #2.
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Korn/Ferry International (KFY) : Free Stock Analysis Report
AppLovin Corporation (APP) : Free Stock Analysis Report
Staffing 360 Solutions, Inc. (STAF) : Free Stock Analysis Report
DLH Holdings Corp. (DLHC) : Free Stock Analysis Report
Dropbox, Inc. (DBX) : Free Stock Analysis Report
