AppLovin (APP) is set to continue innovating and gaining market share, with its ad growth estimates now seen as achievable, Morgan Stanley said in a note Thursday.
"We now view gaming ad expectations as achievable, even as the company layers in its non-gaming advertising product, which has started strong in e-commerce," the investment firm said.
Morgan Stanley projects a 17% gaming ad revenue growth for the company through 2027, suggesting "more achievable share gains" amid the mobile gaming market's mid-single-digit growth. Morgan Stanley said it also expects AppLovin's non-gaming ad product to drive majority of ad revenue growth in the future.
The investment firm said AppLovin has consistently outperformed the in-app advertising market since 2023 and can still "meaningfully" improve its take rate, without compromising on the results it delivers to advertisers.
Morgan Stanley upgraded AppLovin to overweight from equal-weight, with a lower price target of $350 from $470 to factor in macro uncertainty.
Shares of AppLovin were down 2.6% in recent trading.
Price: 267.94, Change: -7.02, Percent Change: -2.55
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