Shares of Bumble Inc (NASDAQ: BMBL) have already gained more than 10% in recent days but a KeyBanc analyst is convinced there’s more where that came from.
Bumble shares upgraded to overweight
Justin Patterson issued a bullish note in favour of this stock on Tuesday. His “overweight” rating arrived with a price objective of $27 – about a 35% upside on its previous close.
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The analyst is constructive on Bumble shares primarily because he sees it as well-positioned to capitalise on online dating.
When coupled with product initiatives, international ramps, and moderating FX headwinds, we’re increasingly confident the core Bumble app can sustain 20% plus annual revenue growth.
Relative to peers including Match Group, Patterson dubs Austin-headquartered firm more attractive in terms of valuation. Versus their high in late July, Bumble shares are down about 45% at writing.
Bumble could grow margins by 20%
In November, Bumble reported per-share earnings for its third financial quarter that handily topped Street estimates. According to Justin Patterson, the Nasdaq-listed firm could grow margins by up to 20%.
Bumble is benefitting from a secular trend towards online dating globally. By focusing deeply on product, brand, and trust and safety, Bumble has created a business that can garner a meaningful user base across geographies.
Credit card, app downloads, and customer growth data, he added, suggests that macroeconomic challenges are easing and competition has not significantly increased.
All in all, he recommends buying Bumble shares because they’re an “attractive risk/reward” at current levels.
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