Credit Suisse Cuts Applovin Price Target Factoring In Macro/Sector Headwinds

  • Credit Suisse analyst Stephen Ju cut the price target on Applovin Corp APP to $80 from $100 and reiterated an Outperform ahead of quarterly results. 
  • Given the ongoing weakness in the mobile gaming market, the analyst decreases his 1P-related estimates on consumer spending and in-app advertising. 
  • More importantly, with the announcement of the proposed merger of two of its most direct competitors, Ju could see an increase in competitive intensity. 
  • And from the standpoint of macro headwinds in general for the advertising sector, the analyst cut his Software Platform estimates as well, with 2022 starting as a lower baseline for growth.
  • Overall, APP intends to operate the businesses separately and focus on greater profitability (~20% EBITDA margins) in 1P. 
  • The rating reflected 1) operations in the fastest-growing segment in videogames, 2) software to offer more diversified exposure to mobile games secular growth theme, and 3) optionality to expand TAM to non-gaming apps. 
  • Price Action: APP shares traded higher by 10.61% at $40.33 on the last check Monday.
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