TLDR
- AppLovin (APP) stock climbed 7% Monday as Jefferies defended the stock’s 40% year-to-date plunge
- Analyst James Heaney maintains $860 price target, calling current levels a buying opportunity
- Jefferies projects 50%+ top-line growth by FY2026, stock trades at 15x FY2027 EBITDA estimates
- Concerns about AI competition from CloudX, Meta, and Google dismissed as overblown
- Fourth-quarter earnings expected to beat revenue estimates when released February 11
AppLovin (APP) stock jumped 7% Monday after Jefferies analyst James Heaney backed the mobile advertising company despite its rough start to the year. Shares closed at $406.70 Friday, down 40% year-to-date.
Heaney stuck with his Buy rating and $860 price target. He views the recent selloff as creating an attractive entry point for investors seeking high-growth opportunities.
The stock has faced pressure from investor worries about artificial intelligence threatening AppLovin’s advertising platform. Competition from CloudX, Meta Audience Network, and Google Genie has spooked shareholders.
Heaney doesn’t buy the bear case. He labeled these competitive threats as “overblown risks” that have created a mispricing in AppLovin shares.
Valuation Gap Presents Opportunity
At $406.70, AppLovin trades at just 15 times Jefferies’ fiscal year 2027 EBITDA projections. That multiple looks cheap for a company Heaney expects to grow revenue by more than 50% through fiscal year 2026.
The analyst’s bullish stance comes from recent proprietary research. Jefferies conducted surveys and expert checks across AppLovin’s gaming and e-commerce businesses.
Both segments showed positive momentum. Heaney expects this strength to translate into fourth-quarter results that exceed Wall Street revenue estimates.
AppLovin reports earnings February 11, giving investors a near-term catalyst to test the analyst’s thesis. The company provides marketing tools that help mobile app developers grow through user acquisition and monetization.
Wall Street Lines Up Behind Stock
Jefferies joins a growing chorus of analysts backing AppLovin shares. Needham recently upgraded the stock to Buy with a $700 target, highlighting accelerating e-commerce growth.
Piper Sandler holds an Overweight rating at $800. The firm noted consistent expansion in AppLovin’s sellers.json supply metrics and positive app-ads.txt trends.
Evercore ISI launched coverage with an Outperform rating and $835 target. Analysts there view AppLovin as the dominant player in mobile gaming advertising with strong e-commerce expansion potential.
Benchmark kept its Buy rating at $775. The firm pushed back on fears that AI-powered game creation tools will hurt AppLovin’s business model.
Near-Term Catalyst Approaching
The analyst consensus rating of 1.57 reflects strong bullish sentiment across the Street. InvestingPro data indicates the stock’s relative strength index sits in oversold territory.
AppLovin’s 39.64% year-to-date decline has grabbed value-focused investors’ attention. Multiple analysts see the selloff as disconnected from business fundamentals.
Heaney’s research suggests AppLovin’s core gaming business remains healthy. The e-commerce vertical continues showing promise as a growth driver.
Investors get fresh data in two days when AppLovin releases fourth-quarter results. Jefferies expects a revenue beat based on channel checks and survey work heading into the print.
The stock’s sharp decline from earlier highs has created what Heaney calls a dislocation between price and value. His $860 target implies more than 100% upside from current levels.
