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Bumble, Match Climb as Jefferies Swipes Right on Outlook

Jefferies has buy ratings on both Match and Bumble, expecting the companies to beat what it calls conservative consensus revenue estimates.

Shares of Bumble  (BMBL) - Get Bumble Report and Match Group  (MTCH) - Get Match Group, Inc. Report were higher on Tuesday after analysts at Jefferies published a bullish note on the online-dating-apps sector, saying the recent stock underperformance is overdone. 

Analysts at Jefferies see third-quarter revenue estimates for the companies being conservative. They expect both companies to top expectations when they report their earnings. 

Jefferies has buy ratings on both Match and Bumble with a $185 price target on the former and a $65 price target on the latter. 

Shares of Match at last check gained 2.3% to $159.25 while Bumble was up 0.9% to $49.31. 

"Match stock has underperformed year to date (3% rise vs. the Nasdaq Composite up 12%), but we believe the Q3 earnings setup looks favorable," analyst Brent Thill said. 

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Thill identified four key catalysts for the company.

One is a revenue beat thanks to strong preliminary results from Tinder, which accounts for 57% of total revenue. Jefferies also expects Match to improve monetization and engagement growth.

As a result, the firm also expects positive revisions to the company's fiscal 2022 revenue estimates as they currently indicate only 17% growth. 

And Match and Bumble are both likely beneficiaries of the Apple-Epic  (AAPL) - Get Apple Inc. (AAPL) Report ruling, which now permits apps to direct users to third-party billing systems. 

As for Bumble, Thill said, "since going public, BMBL stock has lagged -- now down 38% from [its] post-IPO high. However, we see short-, medium-, and long-term catalysts to support the stock going forward."  

In the short term, the investment firm expects revenue in the third quarter accelerated. In the medium term, international expansion efforts are expected to drive upside in the stock.