Match Group Inc Received its Third Buy in a Row

By Jason Carr

After Wells Fargo and Citigroup assigned a Buy rating to Match Group Inc in the last month, the company received another Buy, this time from Jefferies. Analyst Brian Fitzgerald reiterated a Buy rating on Match Group Inc (NASDAQ: MTCH) today and set a price target of $21. The company’s shares closed yesterday at $17.35.

Fitzgerald said:

“We initiate coverage on Match Group (MTCH) with a Buy rating and $21 PT. Tinder is the asset to watch as the popular mobile dating app accelerates its monetization efforts. Industry tailwinds are favorable (1 of 3 dates begins online) and large untapped ad opportunity represents additional upside. Trading at 10x ’18 EBITDA (vs 20x industry comps) and growing at a 3-year CAGR of 15% (’17-’20), we view the current valuation as compelling. Tinder is the asset to watch as the rapidly growing mobile dating app has already seen Paid Member Count (PMC) more than double since Match’s 4Q15 IPO. We believe PMC (1.8MM ending PMC as of 4Q16) is still underpenetrated as a % of MAU (est ~25MM to ~30MM), providing ample conversion opportunity. Tinder’s a la carte options and indirect (ad) revenue provide additional means for monetization. Our base case scenario assumes 2017 Tinder average PMC of 2.2MM (+74% Y/Y) and total Tinder revenue of ~$306MM. See page 6 for our full Tinder scenario analysis. Industry tailwinds within online dating are favorable. 1 of 3 dates in the U.S. begins with an online dating product. Match’s addressable market (singles online) is ~511MM, expected to grow to 672MM by 2019.”

According to TipRanks.com, Fitzgerald is a top 100 analyst with an average return of 15.6% and a 71.1% success rate. Fitzgerald covers the Technology sector, focusing on stocks such as Endurance International, Activision Blizzard, and IAC/InterActiveCorp.

Currently, the analyst consensus on Match Group Inc is Strong Buy and the average price target is $19.67, representing a 13.4% upside.

In a report released yesterday, BMO Capital also reiterated a Buy rating on the stock with a $21 price target.

Based on Match Group Inc’s latest earnings report for the quarter ending December 31, the company posted quarterly revenue of $320 million and quarterly net profit of $73.81 million. In comparison, last year the company earned revenue of $285 million and had a net profit of $7.15 million.

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Match Group provides dating products. The company product brands include Match, OkCupid, PlentyOfFish, Tinder, Meetic, Twoo, OurTime, BlackPeopleMeet and FriendScout24. It operates through the following segments: Dating and Non-Dating. The Dating segment provides dating products. The Non-Dating segment provides a variety of education services including test preparation, academic tutoring and college counseling services. The company was founded on February 12, 2009 and is headquartered in Dallas, TX.