This post was originally published on this site
https://i-invdn-com.investing.com/news/LYNXMPED0H1GV_M.jpg
JPMorgan analysts resumed shares of AppLovin Corp (NASDAQ:APP) at Neutral with an $18 per share price target in a research note, following a “notable shift in tone” from the company.
They told investors that over the past several months, they have observed the switch from AppLovin and some of its peers, which is reflective of the more challenging operating environment for mobile gaming.
“The wider industry continues to grapple with the headwinds of a post-COVID reversion in spending habits, an economic slowdown, and the impact of prior iOS platform changes. While there are arguably some signs of stabilization, the timeline for a broad return to growth is unclear, and remains dependent on macro factors and the ecosystem replacing lost UAefficacy,” wrote the analysts.
The firm also sees a “more limited set of organic growth drivers” for AppLovin, after previously assuming that Software would grow rapidly from synergies off the MoPub acquisition, leveraging the Adjust salesforce, and a move toward in-app bidding.
The analysts also feel that AppLovin’s messaging is now more focused on the potential for improvements to technology to drive revenue gains, although its offer to merge with Unity “would’ve provided valuable player behavior data.”
“While an attractive FCF yield and repurchase authorization should limit downside from here, we don’t see a catalyst at this point for a re-rating or revision higher for consensus estimates. APP’s high incremental margin software business and optionality around its publishing unit position the company well for when the mobile market ultimately turns, though pending visibility on this, we think it makes sense to be on the sidelines,” the analysts concluded.
