Match Group Is a Global Online Dating Leader, But Shares Are Fairly Valued, JPMorgan Says In Downgrade

After surging more than 175 percent over the past year, Match Group Inc MTCH's stock is now fairly valued with fewer catalysts ahead, according to JPMorgan. 

The Analyst

JPMorgan's Doug Anmuth downgraded Match Group from Overweight to Neutral with an unchanged $42 price target.

The Thesis

Match Group, the parent company of multiple dating platforms including Tinder, is expected to remain a global leader in the sector — but three factors are likely to limit continued upside in the stock, Anmuth said. They are:

• Expectations for Tinder net adds to trend down and return to a more normalized level, while the platform has fewer product catalysts ahead.
• Other dating apps remain stable but are likely to post a low-single-digit sub growth, short of management's expectations for a mid-to-high-single digit growth rate.
• The stock's valuation is fairly valued at 32x 2019E GAAP P/E and 19x 2019E EV/EBITDA.

Investors may want to consider instead owning shares of IAC/InterActiveCorp IAC. The company is Match Group's largest shareholder and spun off a portion of Match Group in its 2015 initial public offering, the analyst said.

IAC's stock is "more compelling," as its valuation implies that the non-dating and ANGI Homeservices' assets are trading at a negative enterprise value, Anmuth said. 

Price Action

Shares of Match Group were trading lower by 0.36 percent Wednesday morning. 

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Photo courtesy of Tinder.