Match Group's Tinder Well Positioned In The Online Dating Market; Citi Initiates At Buy

Mark Kelley of Citi initiated coverage of Match Group Inc MTCH with a Buy rating and $22 price target as the company given the success of the Tinder platform and new product launches.

Online Dating Category

Kelley believes Match Group is positioned to take advantage of the rapidly growing and fragmented online dating category, which could be worth as much as $33 billion by 2019. The positive market dynamics bodes well for Tinder, especially as the company will increase its marketing initiatives to grow in markets outside of the United States and Europe.

Kelley continued that Tinder's marketing initiatives will pay off in 2018 and beyond, but in the meantime, there is still upside to 2017 estimates as the platforms' conversion improves throughout the year.

New Platforms

While Tinder is Match Group's fastest growing brand and is expected to account for up to 34 percent of total revenue and 30 percent of EBITDA by 2018, new product launches provide incremental upside scenarios for the company.

The analyst did, however, note that exact timing of new product launches are expected in 2017 but exact details aren't known. Nevertheless, Kelley argued that any new launches will be incremental to his estimates.

In addition, the divestiture of its non-dating business, specifically Princeton Review business should be viewed as a positive move as the company is deleveraging segments to focus on its core dating business.

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