Life360 (ASX:360) is expected to see improved growth in monthly active users in May and June after a technical issue impacted the location-tracking business earlier in the year, Jefferies said in a Wednesday note.
Conversions to the company's Paying Circle premium membership group are also expected to increase and drive strong top-line growth in the second quarter, with Jefferies estimating year-over-year revenue expansion of 35%.
"Our channel checks suggest an acceleration in digital advertising, which bodes well for Life360's ad revenue," the equity research firm said.
Sensor Tower data for June showed Life360's monthly active users growth accelerating to more than 20.3% year over year from a 19.9% rate in May. While this monthly data might not be fully accurate, it is directionally reliable, suggesting that a Google Play Store suppression issue has now been resolved, Jefferies said.
The investment firm cut its 2026 earnings per share forecast for Life360 by 8% to reflect higher tax rates, but raised its EPS forecasts by 3% for 2027 and 2028, driven by share repurchases of up to $225 million.
It maintained a buy rating on Life360 while increasing the price target to AU$30 from AU$26.
The company's shares climbed 5% in recent Thursday trade.