On Thursday, RBC Capital maintained its Outperform rating on Match Group (NASDAQ:MTCH), with a price target of $35.00.
The firm acknowledged a mixed to negative perspective following Match Group's investor day. The company's financial goals indicate a potential long-term growth rebound coupled with margin expansion. Additionally, Match Group announced the initiation of a dividend and an increase in its buyback program. The dating app Hinge, part of Match Group's portfolio, is expected to see significant growth and margin improvement.
Despite the positive outlook on Hinge, RBC Capital noted some concerns. Match Group has modestly lowered its fourth-quarter guidance, attributing the adjustment to foreign exchange factors. Furthermore, the company's flagship app, Tinder, is forecasted to experience a year-over-year decline in 2025. Match Group also plans to reduce the granularity of its segment disclosures in future guidance, which could impact transparency.
Moreover, RBC highlighted that Match Group has not adequately addressed market saturation issues or the strategies to enhance Tinder's payer penetration. The analyst's remarks indicate that while Match Group's investor day presented some promising developments, there are also several areas where the company's strategy remains unclear.
As a result of these factors, RBC Capital has adjusted its estimates for the fourth quarter of 2024 and the year 2025.
"We'e less optimistic for a meaningful Tinder turnaround but maintain our Outperform rating given that Hinge represents well over half of MTCH's EV, which we believe undervalues the rest of the business and its strong cash generation and capital return going forward," the analysts added.
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