News coming directly from app monetization specialist AppLovin(NASDAQ: APP) has been fairly light in recent days, yet investors were eager to snap up the stock. Much of this had to do with a recommendation upgrade from a newly minted AppLovin bull. The result was that the company's share price had improved by over 10% week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
An undervalued operator
The analyst responsible for the upgrade is UBS' John Hodulik, whose new recommendation is a buy with a price target of $145. This represents quite a change in sentiment for the prognosticator, who previously rated AppLovin a neutral with a $100-per-share fair value estimation.
Hodulik waxed positive about the combination of encouraging revenue growth in the medium term, and the company's modest valuations. He also feels management is effectively getting plenty of bang for the buck, so to speak.
In his latest analyst note on the company, he wrote that its "improved relative return on ad-spend (ROAS) vs competing channels is rarely seen in the digital ads space and could support 20-30% software revenue growth from gaming alone."
Joining the club
The UBS pundit is hardly alone in his bullish assessment of AppLovin's potential. Since the company reported a second quarter that beat consensus analyst estimates both for trailing net income and current-quarter revenue guidance, a clutch of pundits have raised their price targets. Collectively, they're expecting very robust growth; 2024 net income is expected to rise more than threefold on a year-over-year basis to $3.44, on the back of a 35% rise in revenue.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
