BofA says AppLovin’s Q4 Apps revenue below Street likely a surprise to investors

Noting the firm tracks monthly IAP revenues of 500-plus mobile games across five video game stocks on Sensor Tower for intra-quarter reads, BofA analyst Omar Dessouky says that after two consecutive years of year-over-year declines, the U.S. mobile gaming market has returned to growth. For AppLovin (APP), the firm says 3P estimates suggest -4% quarter-over-quarter in Q4 Apps revenue, below the Street at +2% quarter-over-quarter. The sequential decline is likely a surprise to investors, BofA adds, as Q4 typically marks peak season in mobile gaming. While the gaming portfolio’s weakness by itself is hardly a concern at all, it nevertheless introduces a nuance to Q4 setup, as it is unclear if management had assumed normal seasonality in its consolidated Q4 guidance, the firm argues. BofA has a Buy rating on the shares with a price target of $375.