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UBS Upgrades Match Group: Despite Guidance Miss, Long-Term Narrative Remains Intact

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UBS Upgrades Match Group: Despite Guidance Miss, Long-Term Narrative Remains Intact

Match Group Inc (NASDAQ: MTCH) reported its third-quarter earnings in-line with Street expectations and announced disappointing guidance for the next quarter.

Following the stock’s recent sell-off, the current valuation seems compelling, and the spin-off of IAC/InterActiveCorp (NASDAQ: IAC) expected in the first half of 2020 could act as a catalyst, according to UBS.

The Analyst

UBS analyst Eric Sheridan upgraded Match Group from Neutral to Buy, while reducing the price target from $95 to $88.

The Thesis

Match Group’s stock, which had already been under pressure since August due to legal proceedings and the September launch of a dating app by Facebook, Inc. (NASDAQ: FB), declined further after the company announced its fourth-quarter outlook short of expectations, Sheridan said in the upgrade note.

He added, however, that Match Group’s long-term fundamental drivers remained intact. These drivers include Tinder’s growth, the efficient allocation of marketing budget across brands to generate operating leverage and outsized returns and management’s impressive ability to allocate capital across new brands, product launches and potential mergers and acquisitions.

The company’s third-quarter results highlighted both positives and concerns, Sheridan said. While strength in Tinder’s engagement trends continued, the net adds were below expectations, impacted by recent iOS changes.

The analyst reduced the fourth-quarter 2019 estimates for revenues from $562 million to $554 million and for adjusted EBITDA from $230 million to $208 million. The earnings estimate for the quarter was lowered from 57 cents to 49 cents.

Price Action

Shares of Match Group rose 2% to $68.31 on Thursday.

Related Links:

Match Group Delivers Q3 Beat, But Guides Lower

62 Stocks Moving In Wednesday's Mid-Day Session

Latest Ratings for MTCH

DateFirmActionFromTo
Nov 2019MaintainsNeutral
Nov 2019MaintainsEqual-Weight
Nov 2019MaintainsBuy

View More Analyst Ratings for MTCH
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Upgrades Price Target Analyst Ratings Tech

 

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