Now could be the time to buy Life360 Inc (ASX: 360) shares for big potential returns.
That's the view of analysts at Bell Potter, who remain bullish on the family safety technology company.
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What is the broker saying?
Bell Potter believes there is a chance that Life360 will be forced to downgrade its bold monthly active user (MAU) guidance for 2026. It said:
We have reviewed our Life360 forecasts and the key change we have made is to lower our forecast growth in global MAUs this year from 19.2% to 17.5%. The significance of this change is that the guidance is 20% growth and, while we were already marginally below this level before, we are now more significantly below and this suggests or implies we see potential for a downgrade to this metric in the guidance at some stage.
The trigger for making this change is we have reduced our forecast growth for global MAUs in Q1 from 18.8% to 17.6% to be more consistent with the guidance of <20% growth. This level of forecast growth in Q1 makes it look difficult for the full year guidance to be achieved and, for instance, requires that global MAUs increase by >5m in each of Q2, Q3, and Q4 versus our forecast of 2.6m in Q1.
However, despite lowering its MAU expectations, the broker has not made a change to its revenue or earnings estimates. That's because it believes Life360 can convert more existing users to paid plans than previously estimated. It adds:
Despite the lowering in our global MAU growth forecast in 2026 there is no change in our revenue or earnings forecasts as, on the flip side, we have increased our conversion rate forecasts so that there is no change in our paying circle forecast for the full year.
Our average forecast quarterly conversion rate – measured in crude or broad terms – has increased from 3.4% to 3.5% which is still below the average 3.6% in 2025. We are therefore still modestly below last year's level which is perhaps conservative given the addition of Pet GPS but there was an unusual spike in the conversion rate in 3Q2025 which we assume is not repeated this year.
Big potential returns for Life360 shares
According to the note, the broker has retained its buy rating on Life360 shares with a trimmed price target of $35.50 (from $37.75).
Based on its current share price of $20.14, this implies potential upside of approximately 75% for investors over the next 12 months.
The broker concludes:
We have reduced the multiple we apply in the EV/EBITDA valuation from 37.5x to 35x and increased the WACC we apply in the DCF from 9.2% to 9.5% given the risk we see of a potential downgrade to the global MAU growth guidance for this year.
We stress, however, that we see less risk of a downgrade to the revenue or adjusted EBITDA guidance given we believe any shortfall in MAU growth can be made up by a higher conversion rate. The net result is a 6% reduction in our target price to $35.50 which is still a significant premium to the share price so we maintain our BUY recommendation.
