Life360 shares advance as Goldman Sachs hikes estimates
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The numbers: Life360 rose on the ASX after Goldman Sachs lifted its estimates and valuation ahead of the US technology company's third quarter results.
The numbers Life360 shares were up 2% to $19.32 by 1:40pm AEST. They have advanced more than 150% since January.
Goldman Sachs reiterated its 'buy' rating on the stock and raised its target price 11% to $21.85. Goldman Sachs also increased its EBITDA forecasts by 5% in FY24, 7% in FY25 and 16% in FY26, leaving it 7% to 10% ahead of consensus EBITDA estimates.
The context: Goldman Sachs analysts said Life360, maker of the family tracking app of the same name, remains early in its monetisation journey, with revenue per monthly active user "well below" other scaled freemium app peers.
They noted that Life360 has multiple levers to drive higher monetisation including conversion of the user base to paid, international membership rollout, and advertising and indirect data sales.
The analysts see significant operating leverage and earnings growth to come, both in the short-term and in the medium term given attractive unit economics and growth in high-margin indirect revenue streams.
What they said: "Life360's ability to manage costs while driving strong revenue growth has surprised to the upside since pivoting to profitable growth in early 2023," the analysts said.
"... Life360 can continue to re-rate towards best in class tech peers," the said.
The source: Goldman Sachs research
