Axiom Has A Buy Rating On Match Group, Expects Subscriptions To Grow In 2017

Axiom’s Victor Anthony expressed continued confidence in the longer-term opportunity for Tinder and the ability of Match Group Inc MTCH to dominate the dating category.

Anthony maintains a Buy rating on the company, with a price target of $18.

Strong Execution

“Match Group’s management, over the past two quarters, for the most part, has executed against the expectations laid out with the 4Q15 results,” the analyst mentioned, while adding, “Tinder continues to grow and is on pace to double its subscriber base this year.”

“The one wrinkle is the lower than expected ramp of advertising this year, and the corresponding $10 million reduction in Adj. EBITDA guidance to address the advertising opportunity,” Anthony stated.

Related Link: Match Group Reports Third Earnings Surprise In A Row

The analyst believes Match Group’s incremental investments is a “wise” use of capital to address potentially significant revenue and profit opportunities.

Tinder’s Potential

During 2Q16, Tinder added 209,000 paying subscribers, beating the estimate and taking the total subscriber base to 1.23 million.

Tinder has been witnessing rapid growth in Japan and India, while Brazil and South Korea have also been “standout markets.”

According to the Axiom report, “The delay in launching advertising was said to be the result of internal competition for resources, with the launch of Tinder Social and updated Tinder Plus features consuming talent within the firm.”

Anthony expects Tinder to drive $25-$30 million annually from advertising, with 30 million MAUs and 12-13 million estimated DAUs.

Full ratings data available on Benzinga Pro.