Revised TargetsBut most are still way above our current SP. GLTA
While Nuvei Corp. reported first-quarter results that modestly exceeded the Street’s expectations on Tuesday, a group of equity analysts lowered their target prices for the financial technology company to fall in line with recent sector weakness.
“Nuvei results were in-line-to-modestly-higher versus our expectations,” said Citi analyst Ashwin Shirvaikar. “Nuvei left its FY22 outlook unchanged, while 2Q22 represents a measurable deceleration in the growth rate vs. 1Q22 (organic growth in the teens by our calculation)… this does imply a 2H22 re-acceleration and we believe investors will begin to ask about visibility. Notably, the company mentioned the possibility of a transformative acquisition down the road. Our estimates change modestly, but we’re reflecting the decline in comp valuations since prior earnings.”
Shares of the Montreal-based payment processor fell 6.4 per cent on Tuesday as tech stocks continued to slide. That drop came despite reporting revenue of US$215-million, up 43 per cent year-over-year and above the consensus forecast of US$211-million. Adjusted earnings per share of 46 US cents was 5 US cents above the Street’s expectation.
It also reiterated its prior outlook for fiscal 2022, including revenue of US$940-$980-million (up 33 per cent year-over-year at its midpoint) and adjusted EBIYDA of US$407-US$425-million (up 31 per cent).
“While we continue to believe in the many positives in the Nuvei story (high percentage of revenues from e-commerce; exposure to differentiated and growing revenue mix including online gaming; tech stack geared to take advantage of the revenue mix; attractive financial metrics, etc.), we are cautious of the risks (M&A-heavy backdrop; limited track record in current form; controlled corporation dynamics, etc.,),” said Mr. Shirvaikar. “Taken together, we believe the risk/reward is balanced. We believe the implied forward outlook should support the stock at current levels but also that a combination of sustained follow-through on the profitability metrics and better disclosure is needed to provide a material upside catalyst.”
Maintaining a “neutral” recommendation for Nuvei shares, Mr. Shirvaikar cut his target to US$50 from US$63. The average on the Street is US$87.87.
Others making changes include:
* RBC’s Paul Treiber to US$80 from US$100 with an “outperform” rating.
“Nuvei reported Q1 above consensus,” said Mr. Treiber. “However, Q2 guidance below consensus materially weighed on the stock. While the shortfall reflects FX and Nuvei is continuing to execute (record customer wins, share gains, etc.), the market is punishing any uncertainty. We believe Nuvei’s discounted valuation (14 times EV/EBITDA) and solid FCF/economics will provide a backstop for the stock in time.”
* Credit Suisse’s Timothy Chiodo to US$85 from US$95 with an “outperform” rating.
* Cowen and Co.’s George Mihalos to $87 from $123 with an “outperform” rating.
* JP Morgan’s Tien-Tsin Huang to US$65 from US$83 with an “overweight” rating.