Wirecard Has 'Limited Rationale For Multiple Expansion,' Guggenheim Says In Downgrade

Guggenheim Securities is lowering its revenue, EBITDA and EPS estimates for Wirecard WRCDF after the card processor's fourth-quarter print. 

The Analyst

Jeff Cantwell downgraded Wirecard from Neutral to Sell with a 110-euro ($122.81) price target. 

The Thesis

"We see limited rationale for multiple expansion pending the outcome of all external investigations; slowing global growth will also likely constrain sector multiples in out years," Cantwell said in a Monday note. (See the analyst's track record here.) 

Wirecard reported fourth-quarter total revenue at 572 million euros, net revenue at 277 million euros and adjusted EBITDA at 165 million euros. Transaction volume came in at 34.7 billion euros, significantly short of the 38.7-billion-euro estimate, Cantwell said. 

Although European volume grew 20 percent year-on-year, international volume stood at 17.4 billion euros, below the estimate of 21.7 billion euros. The quarter’s EPS of 0.79 euros missed the consensus expectation of 0.93 euros. 

Although management reiterated its 2019 EBITDA guidance of 740-800 million euros, the Guggenheim analyst said the company could face volume and take rate headwinds.

Guggenheim lowered its revenue estimates for 2019 and 2020 to 2.6 billion euros and 3.2 billion euros, respectively.

Guggenheim reduced its EBITDA estimates to 751 million euros for 2019 and to 958 million euros for 2020 to reflect higher expenses, including an increase in the company’s internal controlling processes.

The research firm's EPS estimates for 2019 and 2020 were lowered from 4.34 euros to 3.94 euros and from 5.85 euros to 5.14 euros, respectively.

Price Action

Wirecard OTC shares were climbing by 4.25 percent to $153.25 at the time of publication Monday. 

Related Links: 

Wirecard Investigation Sends Guggenheim To Sidelines

Benzinga's Top Upgrades, Downgrades For April 26, 2019

Photo courtesy of Wirecard.