Match Group Is a Global Online Dating Leader, But Shares Are Fairly Valued, JPMorgan Says In Downgrade

After surging more than 175 percent over the past year, Match Group Inc (NASDAQ: MTCH)'s stock is now fairly valued with fewer catalysts ahead, according to JPMorgan. 

The Analyst

JPMorgan's Doug Anmuth downgraded Match Group from Overweight to Neutral with an unchanged $42 price target.

The Thesis

Match Group, the parent company of multiple dating platforms including Tinder, is expected to remain a global leader in the sector — but three factors are likely to limit continued upside in the stock, Anmuth said. They are:

• Expectations for Tinder net adds to trend down and return to a more normalized level, while the platform has fewer product catalysts ahead.
• Other dating apps remain stable but are likely to post a low-single-digit sub growth, short of management's expectations for a mid-to-high-single digit growth rate.
• The stock's valuation is fairly valued at 32x 2019E GAAP P/E and 19x 2019E EV/EBITDA.

Investors may want to consider instead owning shares of IAC/InterActiveCorp (NASDAQ: IAC). The company is Match Group's largest shareholder and spun off a portion of Match Group in its 2015 initial public offering, the analyst said.

IAC's stock is "more compelling," as its valuation implies that the non-dating and ANGI Homeservices' assets are trading at a negative enterprise value, Anmuth said. 

Price Action

Shares of Match Group were trading lower by 0.36 percent Wednesday morning. 

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Photo courtesy of Tinder.