Payoneer's Massive Potential Market Opportunity For Cross Border Payments Gives Long Growth Runway, Says Analyst

Needham analyst Mayank Tandon reiterates Payoneer Global Inc PAYO with a Buy and a $10 price target.
Needham recently hosted investor meetings with John Caplan (CEO), Bea Ordonez (CFO), and Michelle Wang (IR), focusing on the sizable growth opportunity for PAYO given the massive TAM for cross-border payment services that it provides for SMBs and gig workers.
PAYO operates globally, resulting in a potential market with over 300 million addressable SMBs needing cross-border payments and other financial services, helping PAYO sustain a 20%+ organic growth rate over the long term.
Tandon expects management to continue to add new products and expand its geographical footprint, with areas like Latin American payments, B2B AP/AR, commercial cards, and working capital all representing sizable long-term growth opportunities helping PAYO increase the TAM, drive additional revenue growth, and improve profitability levels long-term.
Management highlighted the strong adoption rates for its newer product offerings, such as B2B AP/AR, commercial card, and working capital, which have attractive unit economics, given the increased complexity of these transactions.
These products are scaling rapidly and are still in the early innings of adoption. Given their attractive unit economics and high adoption rates, Tandon expects PAYO's higher take-rate products to serve as a tailwind to growth and margins.
The analyst believes PAYO can grow revenue at a 20%+ organic clip over the long term while improving profitability as management invests in new products and expands its geographic footprint.
While the shares trade in line with a group of other SMID payment names, the analyst finds PAYO worthy of a premium valuation given its competitive strengths, solid growth prospects, and rapidly scaling profitability.
The analyst views the risk-reward as favorable for SMID investors seeking exposure to a high-growth cross-border payments company with positive secular trends well-positioned to benefit from a higher interest rate environment.
Price Action: PAYO shares traded lower by 1.97% at $6.20 on the last check Wednesday.

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