Moelis first outwith Life360 initiation, glowing...

Moelis first outwith Life360 initiation, glowing review

SarahThompson andAnthonyMacdonald

May 22, 2019 —11.43am

StockbrokerMoelis Australia has jumped aboard the Life360 bandwagon, telling clients therecently listed app owner's shares could return 55.8 per cent over the comingyear.

Moelis analystBrendon Kelly initiated on the stock with an 18-page report on Wednesday,slapping a "buy" rating and $6.53 price target. [Its shares weretrading at $4.32 in early trade, well below the $4.79 IPO price.]

Moelis made asix point pitch as to why clients should buy the stock including the Life360'smarket position, an underpenetrated market, growth in users, its ability tomonetise its user base, a scalable platform and the alignment of itsfounders/management with investors.

Life360 founderChris Hulls rings the bell for the US app maker's IPO on May 10. LouiseKennerley

"We believethe company has substantial growth prospects through a rapidly expanding userbase and monetisation initiatives which are in their infancy," Moelis toldclients.

"We thinkthe valuation is compelling at 4.5x EV/2020e sales given the company’s longrunway for growth."

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Moelis saidclients should compare the app owner to US-based digital advertising platformsincluding Pintrest and Snap, which trade at 12.4-times and 7.6-times 2020forecast revenue. The analyst valued Life360 at 6.5-times forecast sales.

Moelis'endorsement was a much needed show of support for Life360, whose shares weretrading 13 per cent below their initial public offering price when the stockopened on Wednesday. After a strong debut - with the stock up 11 per cent onday one - support had waned.

The brokerhad no role in Life360's initial public offering and is the first of themainstream sell-side research teams to start formal coverage of the stock.

Analysts fromLife360's lead managers - Credit Suisse and Bell Potter - can formally initiateon the stock once they're released from restrictions.