By Sam Boughedda
Wedbush initiated coverage of AppLovin Corp (NASDAQ:APP) shares with an Outperform rating and a 12-month price target of $26.00 per share on Friday.
Analysts there said the rating and price target reflect 3.0x their FY:24 revenue estimate of $4.17 billion.
"Our valuation is based upon a sum-of-the-parts analysis, with the Software Platform business valued at roughly $18.00 per share (on a 3.8x multiple), which we believe is warranted given strong revenue and profit growth potential partially offset by concerns around macroeconomic pressure and guidance, and the Apps business valued at roughly $8.00 per share (on a 1.8x multiple), which has a less clear future," explained the analysts.
Wedbush expects AppLovin to deliver robust top- and bottom-line expansion for the foreseeable future "driven by positive momentum within its core AppDiscovery, MAX, AppLovin Exchange, and Adjust solutions."
"The evolution of its AXON machine-learning engine and the integration of MoPub should allow AppLovin to continue to extend its ad market reach in gaming and non-gaming verticals. Several factors could put near-term financial results and FY:22 and FY:23 guidance at risk, including macro / inflationary pressure and the Apps slowdown. Long-term growth potential more than offsets near-term issues in our view," the analysts concluded.