On Tuesday, KeyBanc Capital Markets adjusted its outlook on Match Group (NASDAQ:MTCH), a leading company in the online dating industry. The firm's analyst has reduced the price target on the company's stock to $43.00 from the previous $45.00. Despite the price target cut, the analyst maintains an Overweight rating on the shares.
The adjustment follows the release of third-quarter earnings within the dating stock sector, which highlighted a variance in expectations. Match Group's competitor, Bumble (NASDAQ:BMBL), provided a conservative forecast after experiencing a difficult second quarter. In contrast, Match Group's anticipation of a rebound for its flagship app, Tinder, was postponed once more. The analyst noted the difficulty in determining whether Tinder's slowdown was primarily due to the iOS 18 update, which coincided with the app's challenges, or broader pressures within the category.
Investors' reactions to past execution challenges at Match Group may lead to a cautious stance, expecting less favorable outcomes. This sentiment could potentially limit the impact of the company's investor day in December. The new price target of $43.00 is based on an 11x multiple of the company's estimated 2025 Enterprise Value to Adjusted Operating Income (EV/AOI).
The analyst also commented on Bumble, which is rated Sector Weight by KeyBanc. Bumble's shares might experience short-term strength due to third-quarter payer growth and the possibility of acquisition interest. However, the analyst expressed reservations about Bumble's growth prospects for 2025, especially given the market share gains of Hinge, another competitor in the online dating space.
In other recent news, Match Group has seen a series of adjustments to its financial outlook following mixed results in the third quarter. Barclays (LON:BARC), Goldman Sachs (NYSE:GS), and Truist Securities have all revised their price targets for the company, citing a decline in users and payers at Tinder, Match Group's flagship dating app. Despite the challenges, Match Group's revenue and EBITDA figures aligned with market consensus, and the company has effectively managed costs.
The company's Q4 revenue expectations range between $865 million and $875 million, with a slight decrease anticipated for Tinder's revenue. In contrast, Hinge, another app in Match Group's portfolio, has shown robust growth, with a significant 36% increase in revenue to $145 million. These recent developments have led to analysts from Goldman Sachs and Truist Securities expressing potential improvements in Tinder's performance towards the second half of 2025.
In the face of these challenges, Match Group is focusing on enhancing Tinder's user experience and ecosystem, with further insights on upcoming product innovations and revenue growth potential expected to be shared during the Investor Day in December 2024. The company also plans to return at least 75% of free cash flow to shareholders.
InvestingPro Insights
To complement the analysis provided by KeyBanc Capital Markets, recent data from InvestingPro offers additional context on Match Group's financial position. The company currently has a market capitalization of $7.63 billion and trades at a P/E ratio of 13.1, which is relatively low compared to its near-term earnings growth potential. This aligns with an InvestingPro Tip suggesting that MTCH is "Trading at a low P/E ratio relative to near-term earnings growth."
Despite recent challenges, Match Group remains profitable, with a revenue of $3.49 billion over the last twelve months and a robust gross profit margin of 72.44%. An InvestingPro Tip highlights that "Management has been aggressively buying back shares," which could indicate confidence in the company's long-term prospects.
It's worth noting that Match Group's stock has experienced recent volatility, with a 13.54% decline over the past week and a 15.32% drop in the last month. This aligns with the KeyBanc analyst's observations about investor caution due to past execution challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Match Group, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.