Applovin: Scotiabank Raises PT to $575, Maintains Sector Outperform Rating

Applovin: Scotiabank Raises PT to $575, Maintains Sector Outperform Rating

Scotiabank has increased its price target for AppLovin (APP) to $575, while maintaining its Sector Outperform rating. This move comes amidst a period of strong performance for the advertising technology company, driven by robust Q2 earnings and renewed investor confidence.

In the second quarter of 2025, AppLovin reported a 77% year-over-year surge in revenue, reaching $1.26 billion. This growth was fueled by the company's transformation into a pure-play advertising technology business, as evidenced by its strong adtech operations and improved gross margins [1]. Additionally, AppLovin managed to reduce operating costs by 29%, including a 34% cut in sales and marketing expenses, demonstrating disciplined cost management and operational efficiency.

The company's earnings per share (EPS) from continuing operations climbed sharply from $0.89 last year to $2.39, reflecting robust earnings momentum. Adjusted EBITDA nearly doubled year-over-year, reaching $1 billion, signaling powerful operational leverage. AppLovin also generated $772 million in operating cash flow and $768 million in free cash flow, strengthening its balance sheet position [1].

The stock performance has been volatile, with shares surging more than 22% in a week following the Q2 earnings release, bringing the stock back into its latest buy range and putting previous highs back in focus. The 50-day simple moving average (SMA) at $386 acted as a firm support, and the stock rebounded strongly, climbing for five consecutive sessions to reach $470 again. This upward move coincided with analysts raising their 2026 and 2027 revenue projections, citing stronger web traffic and the company’s ability to attract larger clients [1].

The Federal Reserve Chair Jerome Powell's recent comments also contributed to the positive market sentiment, suggesting growing downside risks to employment. This dovish signal supported equities broadly and enhanced confidence in high-growth names like AppLovin [1].

Scotiabank's analysts have noted the company's strategic transformation and financial strength, highlighting the success of its pivot to a pure adtech business. The firm's gaming ad business remains its primary growth driver, but management also highlighted strong results in its e-commerce tests. The decision to limit onboarding of new customers reflects a strategic focus on the upcoming launch of its self-serve platform, which could unlock a new wave of growth [1].

Looking ahead, the $500 level and February's all-time high of $525 remain key upside targets if momentum continues. The firm's gaming ad business remains its primary growth driver, but management also highlighted strong results in its e-commerce tests. The decision to limit onboarding of new customers reflects a strategic focus on the upcoming launch of its self-serve platform, which could unlock a new wave of growth [1].

References:
[1] https://www.fxleaders.com/news/2025/08/27/applovin-stock-app-surges-22-weekly-targets-525-peak-on-growth-outlook/