Bumble, which runs a dating app with the same name and a version in Europe called Badoo, went public last month
Shares of Bumble (BMBL) are slipping on Monday after several Wall Street analysts initiated coverage of the stock, with the group divided on whether to recommend buying shares or staying on the sidelines. Citi analyst Nicholas Jones was among those who started coverage of the dating app company with a Buy rating, telling investors that he views Bumble as a "dominant player exposed to a large opportunity that is still in its early days." More cautious on the name, Goldman Sachs analyst Michael Ng initiated coverage of Bumble with a Neutral rating as he believes the growth opportunities are largely priced into the shares.
BUY BUMBLE: Citi analyst Nicholas Jones initiated coverage of Bumble with a Buy rating and $75 price target. The analyst told investors in a research note that he is bullish on online dating as a category, seeing "long-term tailwinds" from a dissipating stigma globally, an increasing age of when people marry, an increasing middle class globally and the increased use of digital products across all aspects of life. He views Bumble as a "dominant player exposed to a large opportunity that is still in its early days."
Voicing a similar opinion, Jefferies analyst James Heaney also started Bumble with a Buy rating and $80 price target. Heaney sees "a massive addressable market" in online dating and views Bumble, which he calls "a premier women's brand," being uniquely positioned to gain share. Further, he thinks Bumble can deliver greater than 20% revenue growth over the next five years given his view that the company "is barely scratching the surface of a massive global opportunity."
Viewing Bumble as a global leader in the online dating space offering a "compelling and differentiated" value proposition for consumers, Stifel analyst John Egbert started coverage of the stock with a Buy rating and $75 price target. The analyst sees a "long runway" of paying user growth and a "multi-year operating leverage story" due to Bumble's high-margin business model and solid profitability thus far.
Meanwhile, Cowen analyst John Blackledge initiated coverage of Bumble with an Outperform rating and $70 price target. The analyst believes the company is poised to benefits from strong secular offline-to-online dating trends and to grow its leading female-first-brand in new geographies.
ON THE SIDELINES: More cautious on the name, Goldman Sachs analyst Michael Ng initiated coverage of Bumble with a Neutral rating and $46 price target. While the analyst acknowledged that Bumble is a leader in the "large and growing" freemium global online dating market and should benefit from platform innovation, pricing optimization, and international expansion, he argued that these growth opportunities are largely priced into the shares.
JPMorgan analyst Cory Carpenter also started Bumble with a Neutral rating and $60 price target. The analyst is bullish on the secular growth opportunity within online dating and believes Bumble is well positioned for sustained mid-20% growth. However, he finds the stock's risk/reward as balanced at current levels, with Bumble trading at a slight premium to Match Group (MTCH).
Voicing a similar opinion, Morgan Stanley analyst Lauren Schenk also started coverage of Bumble with an Equal Weight rating and $56 price target. While she remains bullish on online dating and calls Bumble the "formidable number two global online dating player," Schenk has concerns about valuation and has less confidence than the market in the "global brand" bull case. She also prefers a portfolio versus a single brand approach.
BMO Capital analyst Daniel Salmon and Raymond James analyst Andrew Marok also started coverage of Bumble with Market Perform ratings.
PRICE ACTION: In afternoon trading, shares of Bumble have dropped about 2% to $60.61.