DJ Postpandemic Romance Is a No-Brainer Bet. Buy Match Stock, Analysts Say. -- Barrons.com
Match Group, parent of Tinder and other online dating sites, could be the ultimate reopening play. As the world emerges from the Covid-19 pandemic, you can be pretty sure that one thing people are going to want to do is start looking for romance.
That said, Match (ticker: MTCH) earlier this week posted fourth-quarter results that left investors largely unenthused. Revenue in the quarter was $651 million, up 19% from a year ago, and slightly ahead of the Street consensus at $648.8 million. But profits at 48 cents a share were a penny light of expectations, and 2021 revenue guidance of $2.75 billion to $2.85 billion at the midpoint was a little shy of the old Street consensus at $2.84 billion. The stock sold off 8% on Wednesday after the announcement late Tuesday.
Two analysts seized the moment to upgrade their ratings on the stock, ahead of what they expect will be considerable acceleration in the stock in the second half of 2021.
J.P. Morgan analyst Cory Carpenter upped his rating on the stock to Overweight from Neutral, with a new price target of $175, up from $130. Match is "one of the best positioned companies across our coverage universe as the global economy starts to re-open," he writes.
The stock's recent post-earnings dip and year-to-date decline offer provide a good entry point for investors to buy the stock, he says.
"We have long been bullish on the secular growth opportunity within online dating and Match's strong positioning as the clear leader," he writes.
Carpenter conceded that fourth-quarter results "highlighted that the company continues to feel the impact from the pandemic, especially international markets where Tinder has a bigger presence." Still, he thinks Tinder revenue will accelerate throughout the year -- and he thinks the story on the company's other brands are "only getting better."
From a higher level, Carpenter thinks that the Match story is evolving from a focus primarily on Tinder net subscriber adds to "a greater appreciation for Match's strong portfolio that contains numerous growth brands."
In addition to Tinder, the Match portfolio includes Hinge, OKCupid, PlentyofFish, Meetic (in Europe), Pairs (in Japan, Taiwan and South Korea), OurTime (for singles over 50), and of course the flagship Match site.
Meanwhile, Susquehanna Financial Group analyst Shyam Patil raised his rating on Match shares to Positive from Neutral, with a new target of $165, up from $150. His logic is similar to Carpenter's. Patil writes that Match's business "remains strong and is proving to be resilient." He notes that non-Tinder brands grew year-over-year for the fourth consecutive quarter.
"We see Match as one of the strongest business franchises in the Internet sector, believe a likely second half recovery should be a strong tailwind (which doesn't appear to be fully reflected in the outlook or sentiment), and are taking advantage of a slight dip in the shares," he writes.
Match shares are up 6.6%, to $147.29, but still down 2.5% for the year. The stock has rallied 59% since former parent IAC spun off its stake to holders last July.
Write to Eric J. Savitz at email@example.com
(END) Dow Jones Newswires
February 04, 2021 14:14 ET (19:14 GMT)
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