On Thursday, Truist Securities adjusted its outlook on Match Group (NASDAQ:MTCH), the parent company of popular dating platforms such as Tinder and Hinge. The firm reduced the price target on the company's shares to $35.00, down from the previous target of $37.00, while keeping a Hold rating on the stock.
The decision to adjust the price target comes as Truist Securities awaits clearer signs of a turnaround at Tinder, which is now anticipated to potentially begin materializing in the second half of 2025, according to the firm's estimates. Match Group's third-quarter results presented a mixed picture, with increased revenue per payer (RPP) being counterbalanced by a decline in the number of paying users. The guidance for the fourth quarter suggests a further downturn in Tinder's performance, although this is expected to be somewhat mitigated by continued strong performance from Hinge.
Truist Securities noted that despite the challenging revenue environment, Match Group has been effectively managing costs. This prudent financial management is seen as a way for the company to safeguard its profit margins in the near term while still being able to invest in growth initiatives. However, the analyst believes that Match Group's stock price is likely to stay within a certain range for the time being.
The firm also mentioned that Match Group management is scheduled to host an Analyst Day on December 11, which could provide investors with more detailed information about the company's strategies and outlook.
In other recent news, Match Group Inc (NASDAQ:MTCH). reported mixed Q3 results, with Tinder's revenue experiencing a slight 1% decrease to $503 million, while Hinge's revenue saw a significant 36% increase to $145 million. The company's operating income fell by 14%, attributed to impairments from exiting live streaming services. These developments are part of recent events affecting the company's financial performance. Match Group also repurchased 7.1 million shares for $241 million and ended the quarter with $861 million in cash.
The company's Q4 revenue expectations range between $865 million and $875 million, with a slight decrease anticipated for Tinder's revenue. Match Group is directing its focus towards product innovation and disciplined marketing expenditures. The company also anticipates a full-year 2024 revenue growth of approximately 4% and plans to return at least 75% of free cash flow to shareholders.
InvestingPro Insights
Despite Truist Securities' cautious stance on Match Group (NASDAQ:MTCH), recent data from InvestingPro reveals some intriguing aspects of the company's financial health. As of the last twelve months ending Q3 2024, Match Group reported a revenue of $3.49 billion, with a solid gross profit margin of 72.44%. This robust margin suggests that the company maintains strong pricing power in the competitive online dating market.
InvestingPro Tips highlight that Match Group has a perfect Piotroski Score of 9, indicating strong financial stability. This aligns with Truist Securities' observation about the company's effective cost management. Additionally, the company is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 12.95. This could potentially signal an undervaluation, especially considering the analyst's expectation of a turnaround in Tinder's performance by late 2025.
It's worth noting that InvestingPro offers 7 additional tips for Match Group, providing investors with a more comprehensive analysis of the company's prospects. These insights could be particularly valuable as investors anticipate the upcoming Analyst Day on December 11.
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