11:59 AM EDT, 09/27/2024 (MT Newswires) -- AppLovin ( APP ) could need to look into new ad verticals such as e-commerce to hit its advertising business growth target of 20% to 30% over a multi-year period, Morgan Stanley said in a Friday note.

"We believe APP is now the largest player in the in-game ads market and we do not believe its growth targets are sustainable simply by continuing to take dollars away from competitors," Morgan Stanley said, noting that it estimates consumer spending on mobile games to only grow 5% in the next years.

Apart from tapping other verticals, the investment firm said AppLovin ( APP ) could also continue leveraging the over-$100-billion mobile game market through effective ads that can drive consumer spending on games.

Despite the lack of visibility into the company's path towards its growth target, Morgan Stanley said achieving the ad network growth rate could drive "meaningful upside" to AppLovin's ( APP ) earnings.

Morgan Stanley reiterated its equal-weight rating on AppLovin ( APP ), with a higher price target of $110 from $80.

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