Shares of Match Group Inc (NASDAQ: MTCH) have outperformed the broader S&P 500 index by more than 20% over the past months and investors which is reason enough to move to the sidelines, according to UBS.
Eric Sheridan downgraded Match Group's stock rating from Buy to Neutral with a price target lifted from $88 to $95.
Match and IAC/InterActiveCorp (NASDAQ: IAC) reached an agreement in late December to fully separate and form two independent companies and this in part contributed to the stock's momentum, Sheridan wrote in the downgrade note. Meanwhile, other long-term fundamental drivers remain supportive of Match, including a widening moat around Tinder, efficiency in managing marketing dollars across multiple brands, and successful product launches.
However, the stock has now outperformed the S&P 500 index by around 75% over the past year which suggests a strong outlook is already priced into the stock at current levels, the analyst wrote.
Looking forward, the research firm wrote it is "likely" Tinder can continue outperforming expectations in terms of subscriber and revenue growth. Also, the research firm is estimating that Match Group's portfolio of dating sites and apps can grow subscribers at an 11% compounded annual growth rate through 2024.
However, the upside potential for the company's growth and monetizations along with its use of leverage to deliver cash to shareholders are "well understood" as the stock is trading near an all-time high, the analyst wrote.
Shares of Match Group were trading lower by 1.14% Friday morning at $91.31.