Marqeta Gets 33% Price Target Cut By Analysts, Cite Block Renewal Uncertainty

Keybanc analyst Josh Beck maintained Marqeta Inc MQ with an Overweight and lowered the price target from $9 to $6.

MQ topped Q4 revenue expectations by a low single-digit amount, a tick down from prior quarters, as Powered by Marqeta doubled Y/Y tied to use cases, like expense management, and Financial Services, like Cash App, that grew above the corporate average. 

The bookings composition has notably shifted from emerging FinTechs toward more established brands, which is likely to create a headwind in 2023 for new customer contribution, as are incentives with a couple of large customers and renewals. 

Despite the absence of a Block renewal update, the Company remains confident in its ability to do so. The low-20s 2023 revenue forecast was similar to Beck's Street-low prediction. 

The analyst slightly raised his 2023 revenue forecast to $906 million flowing through overperformance, while his EBITDA also went slightly higher on lower-than-expected opex. 

Beck forecasts low-20s TPV growth in 2024 with 12% revenue growth as he projects a five bps decline in Block take rate, which could pressure GM below 40%, while he expects a modest decline in opex to lead to a moderate improvement in EBITDA Y/Y. 

The price target reflected execution risk tied to a shifting composition of bookings and Block, Inc SQ renewal uncertainty. Yet, he re-rated as he saw the valuation as un-demanding and saw strategic value in Marqeta's broader embedded finance capabilities.

JP Morgan analyst Tien-Tsin Huang downgraded Marqeta from Overweight to Neutral and lowered the price target from $9 to $6.

The firm likes the strategic value and long-term operational improvements at Marqeta. Still, it feels it is time to move to the sidelines given the trade-off of lower near-term growth with longer-term certainty due to stepped-up renewals that surprised to the downside. 

Price Action: MQ shares traded lower by 23.7% at $4.43 on the last check Wednesday.