On Thursday, KeyBanc made adjustments to its outlook on Match Group (NASDAQ:MTCH), reducing the price target to $44 from the previous $46, while continuing to endorse the stock with an Overweight rating.
The firm's analysis suggests that the current efforts by Match Group to enhance the platform's health and transparency are positive steps, yet they anticipate that the stock may face ongoing pressure until there is a clearer improvement in the number of paying users by the third quarter of 2024.
The adjustment in the price target comes despite the firm's estimates for Match Group remaining largely unchanged after the company's recent earnings report. KeyBanc had already set their expectations below the consensus due to the impact of foreign exchange rates. In contrast, Bumble's outlook for the second half of the year was seen as reasonable, particularly in light of a planned product relaunch.
KeyBanc's analysis also included a perspective on Bumble's revenue outlook, which is expected to grow at a high single-digit percentage rate. The firm believes there is potential for margin improvement, which supports a valuation of 6.1 times the estimated 2025 enterprise value to EBITDA (EV/EBITDA). Consequently, KeyBanc reiterated its Overweight rating for Bumble, with a price target set at $16, reflecting 9 times the projected 2025 EV/EBITDA.
For Match Group, the lowered price target now reflects 11 times the estimated 2025 EV/EBITDA. KeyBanc's commentary indicates a cautious optimism, acknowledging Match Group's initiatives to improve its service offerings while also recognizing the need for bolstered investor confidence regarding the company's growth in paying customers as it heads into the latter part of the year.
InvestingPro Insights
In light of KeyBanc's revised outlook on Match Group (NASDAQ:MTCH), InvestingPro provides additional context that may be of interest to investors. With a market capitalization of $8.01 billion, Match Group is trading at a P/E ratio of 13, indicating a valuation that might appeal to value-oriented investors. Notably, the stock has a P/E ratio of 12.27 for the last twelve months as of Q1 2023, suggesting a slight discount compared to the current P/E ratio.
Match Group's revenue growth has been steady, with an 8.17% increase over the last twelve months as of Q1 2023, and a more recent quarterly revenue growth of 9.21%. This aligns with KeyBanc's expectations of Match Group's efforts to enhance its platform. From a profitability standpoint, Match Group has maintained a solid gross profit margin of 71.83%, reflecting the company's ability to manage its cost of sales effectively.
Investors might also find the InvestingPro Tips particularly enlightening: Match Group boasts a perfect Piotroski Score of 9, indicating a strong financial position, and management has been actively buying back shares, which could signal confidence in the company's future prospects. Additionally, the company is expected to be profitable this year and has been profitable over the last twelve months. These factors may contribute to the cautious optimism KeyBanc expressed about Match Group's potential for growth in paying customers.
For those seeking further insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/MTCH. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover more tips that could guide your investment decisions in Match Group.
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