Now could be an opportune time to buy Life360 Inc. (ASX: 360) shares.
That's the view of analysts at Bell Potter, who believe the location technology company could release a strong quarterly update later this month.
Image source: Getty Images
What is the broker saying?
Bell Potter believes that there is "more upside than downside risk to Q1 result" and sees potential for Life360 to exceed expectations. It said:
Life360 will report its 1Q2026 result next Tuesday, 12th May and we expect the company to meet if not slightly exceed its flagged expectations for the quarter of y-o-y MAU growth <20%, adjusted EBITDA margin in the "low double digits", device revenue down 50% on pcp and a negative hardware GM. Our key forecasts for Q1 are global MAUs of 98.4m (equates to a q-o-q increase of 2.6m or y-o-y growth of 17.6%), total paying circles of 2.93m (q-o-q increase of 99k), revenue of US$137.5m (y-o-y growth of 33%) and adjusted EBITDA of US$14.5m (equates to a margin of 10.5%).
Our view is that our Q1 forecasts are consistent with or slightly below the market so importantly both we and the market are at a level where there is probably now more upside than downside risk to the result. But Q1 is still expected to be a relatively soft quarter so we only expect the company to reiterate the full year guidance and if anything we see some downside risk to the forecast y-o-y MAU growth of 20% (we forecast 17.5%).
Big potential returns
According to the note, the broker has retained its buy rating and $35.50 price target on Life360's shares.
Based on its current share price of $19.84, this implies potential upside of approximately 80% over the next 12 months.
Commenting on its recommendation, Bell Potter said:
There is no change in our target price of $35.50 which we only updated last month. The key assumptions we apply in the valuations we use to determine the target price are a 35x multiple in the EV/EBITDA and a 9.5% WACC in the DCF. This TP is still a significant premium to the share price so we maintain our BUY recommendation.
Potential catalysts include the upcoming Q1 where, as mentioned, we see reasonable chance of a small beat but little prospect of an upgrade to the 2026 guidance. A larger potential catalyst, however, is the Q2 result in August if the company can show strong MAU growth and support the full year guidance of 20% growth. The Q2 result is probably also the earliest the company could upgrade the full year guidance though, given the H2 skew this year, this is perhaps more likely at the Q3 result.
