Morgan Stanley analyst Matthew Cost reiterated an Overweight rating and $720.00 price target on AppLovin Corp (NASDAQ: APP).

The analyst comments "APP can sustain above-market growth by continuing to expand its conversion rate, as ~99% of its ads still do not generate a conversion There is a 10x conversion rate gap between APP and market leaders, which implies significant headroom to expand Improvements would stem from APP’s scale/data advantages, continued mix shift into non-endemic ads, and lower repeat rates APP’s conversion rate has expanded 30bp over the last 18 months and we estimate that each additional 10bps would drive 17 points of net revenue growth If APP maintains 20bp of annual conversion rate expansion it could see revenue/ EBITDA ~50% above consensus by ’30 and put our $1,100 bull case valuation in play."

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Shares of AppLovin Corp closed at $514.24 yesterday.