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Jefferies analysts assumed coverage of Match Group (NASDAQ:MTCH) with a Buy rating and $60 per share price target and Bumble Inc (NASDAQ:BMBL) with a Hold rating and $23 per share price target on Wednesday.
The analysts wrote in a note that there is “no recession in love” and that the firm favors Match on the view that product catalysts at Hinge and Tinder can deliver upside to all-time low investor revenue growth expectations.
“MTCH is more likely to see positive est revisions vs. BMBL, which could see negative revisions,” they wrote. ” MTCH’s 2H22 guidance of ~0% y/y rev growth appears highly conservative and sets a low bar for FY23 rev guidance, where investors are likely only looking for mid-to-high single digit growth (vs. historical mid-to-high teens). With BMBL, however, investors are looking for >2x higher rev growth in FY23 (est. 23% vs. 10% for MTCH) leaving more room for negative revision risk. We favor MTCH’s conservative approach to guidance, particularly as we encounter a more challenging macro backdrop.”
The analysts also believe Match has more catalysts to drive accelerating rev growth over the next 2-3 years.
“Based on our analysis of Hinge’s upcoming 2-tier subscription, we think there could be $100-150M of upside to the street’s FY23 Hinge est, or 3-4% upside to total rev. Additionally, Hinge’s accelerated int’l rollout (2 new markets/qtr vs. prior 1/qtr) is already driving an acceleration in global downloads. We also see Tinder (56% of rev) growth benefiting from a new subscription tier and female-focused paid product. We believe FY22 should mark the low point for MTCH rev growth (est. +7%) and model a 13% fwd CAGR (’22-25),” they added.
Match shares are down over 2% Wednesday, while Bumble is down 2.5% at the time of writing.
