Jefferies raises AppLovin stock target after positive AdTech research by Investing.com

Investing.com — Analysts at Jefferies boosted their price target on AppLovin (NASDAQ: ) from $108 to $175 in a note on Friday, citing optimistic trends in mobile game ad spending revealed in their latest survey.

The survey, which represents more than $1.2 billion in app installation spending, reportedly suggests that major players such as APP, Google (NASDAQ:) (GOOG), and Meta (NASDAQ:) are expected to gain market share by 2025, while Unity (U) may lose land.

In their note, Jefferies analysts said that the first forecast of the cost of installation of the application by 2025 shows a significant acceleration to the growth of 6.7%.

While the survey predicts a modest growth of 2.7% for 2024, 2025 is expected to benefit from increased spending on the launch of new games and successful existing titles.

“We see this early view of 2025 as promising for ad networks,” Jefferies said. Analysts also highlighted that ad spending is expected to grow by 3.2% year-on-year through the fourth quarter of 2024.

In addition, Jefferies reported that APP became the fastest growing stock in 2024 and is expected to continue this momentum through 2025.

“App user quality and ability to measure spend” were highlighted as key benefits.

Analysts have pointed out that the increase in cost per installation (CPI) on platforms such as YouTube and Meta, mainly due to the cost of holidays and politics, could lead to a shift in the share of mobile game-specific networks.

Despite the pressure on effective cost per thousand impressions (eCPMs), Jefferies predicts that all mobile game ad revenue will grow by 2025.

“Our survey suggests that APP should be able to sustain Software Platform revenue growth of 20-30% for at least the next two years,” the note added.

From this perspective, Jefferies sees a bullish price of about $246 for APP, driven by rising ad budgets from e-commerce.