Marqeta Analyst Turns Bullish, Sees 'Clear Path To Profitability'

Marqeta Inc MQ stock has experienced a selloff, hitting 52-week lows on Thursday.

The Oakland, California-based company generates around 70% of its revenues from Block Inc SQ, which uses Marqeta’s technology for its Cash App cards.

Marqeta had almost hit free cash flow breakeven last year and is likely to achieve net cash of $2.50 per share this year, according to Wolfe Research.

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The Marqeta Analyst: Darrin Peller upgraded the rating of Marqeta from Peer Perform to Outperform, while establishing a price target of $5.50.

The Marqeta Thesis: The company has several avenues to drive longer-term growth, including credit and embedded finance. It enjoys a higher margin profile, Peller said in the upgrade note.

“Non-SQ business has been showing strength in sectors such as expense management, on-demand-delivery, and more, underscoring the company's vertical diversification,” he added.

Renegotiations with Block should act as a catalyst for Marqeta, the analyst stated. “Bookings growth was strong (70%+ Y/Y growth) and supports sustainability,” he added.

MQ Price Action: Shares of Marqeta rose by 7.28% to $3.83 in premarket trading on Monday.