After surging more than 175 percent over the past year, Match Group Inc (NASDAQ:MTCH)'s stock is now fairly valued with fewer catalysts ahead, according to JPMorgan.
The Analyst
JPMorgan's Doug Anmuth downgraded Match Group from Overweight to Neutral with an unchanged $42 price target.
The Thesis
Match Group, the parent company of multiple dating platforms including Tinder, is expected to remain a global leader in the sector — but three factors are likely to limit continued upside in the stock, Anmuth said. They are:
- Expectations for Tinder net adds to trend down and return to a more normalized level, while the platform has fewer product catalysts ahead.
- Other dating apps remain stable but are likely to post a low-single-digit sub growth, short of management's expectations for a mid-to-high-single digit growth rate.
- The stock's valuation is fairly valued at 32x 2019E GAAP P/E and 19x 2019E EV/EBITDA.
Investors may want to consider instead owning shares of IAC/InterActiveCorp (NASDAQ:IAC). The company is Match Group's largest shareholder and spun off a portion of Match Group in its 2015 initial public offering, the analyst said.
IAC's stock is "more compelling," as its valuation implies that the non-dating and ANGI Homeservices' assets are trading at a negative enterprise value, Anmuth said.
Price Action
Shares of Match Group were trading lower by 0.36 percent Wednesday morning.
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Photo courtesy of Tinder.
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