AppLovin received a bullish endorsement from Citigroup, which predicts the company will deliver strong second-quarter results, sending its stock up by 6.5%. Despite pulling back from a peak, AppLovin remains valued at a high price-to-sales ratio of 22 but showing substantial growth, including a reported 71% increase in its advertising business. Citigroup maintains a buy rating and a $600 price target for the stock, suggesting nearly 70% potential upside. Additionally, expansion into new verticals like connected TV bolsters future growth prospects for AppLovin.
Citi's note today clearly gave the stock a boost. The bank reaffirmed AppLovin as a top pick heading into its second-quarter results, saying that it expects the company's results to be toward the high end of its guidance range.
In the first quarter, AppLovin stock reported 71% growth in its core advertising business to $1.15 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 92% to $943.3 million.
Citi sees more positives for the stock in the second half of the year. It also maintained a buy rating on the stock with a price target of $600, implying nearly 70% upside in the stock.
The stock remains pricey at a price-to-sales ratio of 22, but it has the growth to back it up.
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