Why is the Life360 (ASX:360) share price jumping 17% today?

Life360 is having a better day

| More on:
a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Lief360's shares are rebounding on Friday
  • A recovery in the tech sector and bullish broker notes appear to be supporting its shares
  • One broker believes its shares can more than double

The Life360 Inc (ASX: 360) share price is bouncing back from yesterday's selloff.

In afternoon trade, the location-based services provider's shares are up 17% to $5.50.

Though, despite today's rebound, the Life360 share price remains down 21% since the start of the week.

Why is the Life360 share price surging higher today?

Investors have been bidding the Life360 share price higher on Friday for a couple of reasons.

One of those is investors flooding back into the tech sector following a very strong night of trade on Wall Street's Nasdaq index.

Another catalyst for the rise in the Life360 share price appears to have been the positive response to the company's results from brokers.

What are brokers saying?

This morning the teams at Bell Potter and Credit Suisse maintained their equivalent of buys ratings on the company's shares.

Credit Suisse has held firm with its outperform rating and $16.50 price target, whereas Bell Potter has retained its buy rating and trimmed its price target to $10.00.

Both brokers continue to forecast strong growth over the coming years and appear to see this share price weakness as a buying opportunity.

Commenting on the result, Bell Potter said: "Life360 had already pre released most of the key metrics in the 2021 result which were all very strong. These included subscription revenue growth of 48%, total revenue growth of 40%, paying circles growth of 38% and, by our estimation, average revenue per paying circle (ARPPC) growth of 20%. The company ended the year with a cash c.US$94m after adjusting for the Tile acquisition and the only debt is convertible notes of c.US$8m. There was no final dividend but we did not expect any."

And while the broker has made some small reduction to its forecasts, it still expects very strong growth over the coming years.

"There is negligible change in our 2022 and 2023 revenue forecasts. We have modestly reduced our Tile revenue forecasts but this has been offset by increases in our subscription revenue forecasts. We have, however, modestly increased our forecast underlying EBITDA losses from US$30.1m to US$34.0m in 2022 and from US$11.3m to US$12.9m in 2023," it added.

Bell Potter is forecasting a 142% increase in revenue to US$273.3 million in FY 2022 and then a further 22% lift in revenue to US$333.7 million in FY 2023.

All in all, it believes this makes the Life360 share price great value at the current level.

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Broker looking at the share price.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Broker Notes

Guess which ASX 200 share offers 12% upside and a 4% dividend yield

Bell Potter just slapped a buy rating on this stock.

Read more »

A man leaps from a stack of gold coins to the next, each one higher than the last.
Broker Notes

Qantas or Telstra share price: Which will climb higher in 2024?

Let's see what top broker Goldman Sachs has to say about these ASX blue-chip stocks.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Woman using laptop for job search
Investing Strategies

2 ASX 200 shares to buy for 'strong growth' at decent prices right now

Searching for a bargain? Here's a pair that Catapult's Dylan Evans has his eyes on at the moment.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Uranium is set to boom, and this is the 'premium' ASX stock to buy

Shaw and Partners' Jed Richards reckons these are the shares to buy for the nuclear energy theme.

Read more »

female in hard hat crosses fingers
Investing Strategies

The ASX 200 stock that could get second time lucky

These shares have failed to impress in 2024, but many experts believe it's a bargain buy.

Read more »