AppLovin’s Strong Advertising Growth and Strategic Moves Justify Buy Rating

Bank of America Securities analyst Omar Dessouky has reiterated their bullish stance on APP stock, giving a Buy rating yesterday.

Omar Dessouky has given his Buy rating due to a combination of factors, primarily driven by AppLovin’s strong performance in the advertising segment. The company’s Q1 results surpassed expectations, with advertising revenue growing significantly year-over-year and quarter-over-quarter. This growth was largely fueled by gaming advertisers and a notable increase in eCommerce revenue, which outpaced Bank of America’s estimates. The introduction of a self-service dashboard is expected to further accelerate advertiser onboarding, enhancing future growth prospects.
Despite a cautious outlook for Q2 due to a temporary slowdown in web merchant onboarding, Dessouky anticipates potential upward revisions in 2025 and 2026 forecasts. The valuation of AppLovin remains attractive, with shares appearing inexpensive compared to the broader market. Additionally, the planned divestiture of its mobile games portfolio is seen as a positive move, simplifying financial reporting and making the company more appealing to a broader range of investors.

In another report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $420.00 price target.