It wasn’t exactly love at first sight for dating-app company
and Wall Street. A number of analysts initiated coverage of the stock on Monday, with the group nearly evenly divided on whether to recommend buying shares.
Shares of Bumble (ticker: BMBL) rose 1.9%, to $62.80 in afternoon trading.
As of Monday, six sell-side research analysts rate Bumble shares a Buy, and five have placed a Hold rating on the company. Eleven analysts have initiated coverage so far, according to Bloomberg data, resulting in an average target price of $68.10, which implies an upside of roughly 9%.
BMO Capital Markets analyst
initiated coverage Monday with a $65 target price and a market perform rating on shares. His team says there is a lot to like about Bumble’s business, including its rising profit margin, double-digit sales growth, and strong free cash flow.
In a follow up to the initiation note, however, Salmon wrote that while the business is a good one, shares are too expensive to buy at current prices. Since its debut in public markets last month at $43, Bumble shares have advanced roughly 45% and closed at $61.65 Friday.
“So we either look for a better entry point, or a change in the story, and the most likely thesis changer is probably product innovation, similar to when Match launched Tinder Gold a few years ago and drove a period of considerable outperformance for that name,” Salmon said.
J.P. Morgan analyst Cory Carpenter had a similar view of Bumble’s stock, pointing out that at current prices, shares trade at a “slight premium” to
(MTCH). Carpenter has a neutral rating and $65 target price.
Carpenter too says the business is good: it is the second-highest grossing dating app behind Tinder, and the company is positioned to for “sustained mid-20% growth.”
In his initiation note, Stifel analyst John Egbert placed a Buy rating on the stock with a $75 target price. Egbert wrote Monday that similar to other companies in his internet coverage universe, he uses a discounted cash flow analysis, which is based on expected future cash flows, to determine the company’s value. Egbert concludes that relative to other subscription media businesses, and digital media companies, Bumble is one of the better values.
Susquehanna’s Shyam Patil was the first analyst to initiate coverage on the name last week. Patil has a positive rating on the stock, and a target price of $78.
Bumble went public in February, raising $2.2 billion through its initial public offering. The company runs a dating app which shares the Bumble name, and a version in Europe called Badoo. The core Bumble app also includes features that help people find platonic friends and networking connections.
Write to Max A. Cherney at email@example.com