Goldman Sachs on Thursday upgraded Bumble and Match Group with a bullish outlook on the online dating industry. Bumble and Match Group are down 3.5% and 6.2%, respectively, this year amid a sell-off in tech stocks, but Goldman sees a buying opportunity at these levels. "Match Group & Bumble have underperformed the S & P 500 in '21 and we see the current valuation as an attractive entry point into a multi-year compounded growth story," Goldman's Alexandra Steiger said in a note. Goldman raised its rating on both stocks to a buy. Steiger set a $54 price target on Bumble, implying 65.2% upside from its close Wednesday. The analyst also put a $157 price target on Match Group, 26.5% higher than Wednesday's closing price. Bumble went public in 2021 and is a dating platform focused on women. Match Group's brands include Tinder, Match.com, OkCupid and Hinge. The two companies comprise over 50% of the online dating industry based on their fiscal year 2020 revenue base, Goldman noted. "Over the last few years online dating has evolved to be the most common way for people to meet in the US and many other western markets. But despite the growing social acceptance of online dating, penetration rates have remained low and as a result, we see ample runway for online dating companies, most notably Match Group and Bumble to grow their user and revenue base," Steiger said. The two companies are also expanding more into social ventures outside of dating, which could provide even further growth, Goldman said. "With Match Group's introduction of social discovery features in a number of its dating services, its acquisition of Hyperconnect and Bumble's (re)launch of BFF, the lines between social/friend discovery and dating continue to blur, and we see a path for incremental monetization opportunities in the years ahead," Steiger said. —CNBC's Michael Bloom contributed reporting.
The display outside the Nasdaq MarketSite is pictured as the dating app operator Bumble Inc. (BMBL) made its debut on the Nasdaq stock exchange during the company's IPO in New York City, New York, U.S., February 11, 2021.