On Monday, an analyst group maintained an Outperform rating on AppLovin Corp (NASDAQ: APP) and significantly increased the price target to $480 from the previous $260. The decision follows recent calls with experts participating in AppLovin’s e-commerce pilot program. The experts shared positive early impressions and metrics, comparing the return on ad spend (ROAS) favorably with that of Meta Platforms (NASDAQ: META).
They noted that while the performance has been promising, the long-term sustainability and scalability of the results will not be fully known until the pilot’s expected full release in early 2025. According to the analyst, the recent uptrend in AppLovin’s stock performance, coupled with accelerating momentum in the e-commerce sector, will likely generate multiple benefits for the company. These factors are anticipated to contribute positively to both the stock and the company’s business momentum as it heads into 2025.
The increased price target reflects a bullish outlook on AppLovin, considering it a top pick within the coverage area. The analysis suggests that the early success of the e-commerce pilot could be a significant growth driver for the company. In recent news, AppLovin Corporation announced plans to offer senior notes to repay existing secured term loan facilities due in 2028 and 2030.
The proceeds from this offering will also be allocated for general corporate purposes. J.P. Morgan Securities LLC, BofA Securities, Inc., and Morgan Stanley & Co. LLC are the joint book-running managers for this transaction.
Additionally, AppLovin is transitioning to an all-unsecured debt capital structure after acquiring investment-grade ratings from S&P Global Ratings and Fitch Ratings.
Analysts raise AppLovin price target
This move is set to provide the company with increased financial flexibility. The finalization of this facility is dependent on the termination of the company’s current senior secured credit facility and the repayment of existing secured term loans.
The company’s third-quarter results showed a 39% year-over-year increase in revenue, reaching $1.2 billion, primarily driven by the company’s advertising network’s performance within the gaming sector. Citi, Loop Capital, and Daiwa Securities Analysts responded positively to these developments, maintaining Buy ratings and raising their price targets for AppLovin. AppLovin also projected Q4 2024 revenue to be between $1.24 billion and $1.26 billion, with adjusted EBITDA expectations of $740 million to $760 million.
These projections, the company’s plans for financial restructuring, and recent performance mark the ongoing developments at AppLovin. AppLovin Corp’s recent stock performance aligns with the bullish outlook. The company’s stock has shown remarkable growth, with a 744.04% price return over the past year and a 269.52% return in just the last three months.
This surge has pushed the stock to trade near its 52-week high. The company’s financial metrics also support the positive sentiment. AppLovin’s revenue grew by 41.48% in the last twelve months, reaching $4.29 billion.
The company maintains a solid gross profit margin of 73.89% and an impressive EBITDA growth of 136.66% over the same period. Analysts expect sales growth to continue in the current year, aligning with the optimistic view of the company’s e-commerce potential. Additionally, the company’s profitability over the last twelve months and expectations of net income growth this year further reinforce the positive outlook.
