Analyst Raises Concerns About Euronet, Highlights Reduced Intra-European Travel Transactions Amid Inflationary Pressures

Needham analyst Mayank Tandon reiterated a Buy rating on Euronet Worldwide, Inc. EEFT, lowering the price target to $115 from $125.

Tandon believes EEFT operates a well-diversified set of payment businesses with a global footprint that should be able to generate mid to high-teens EPS growth over the LT.

However, the weaker intra-European travel transactions have caused EEFT to trim its FY23 outlook.

Europe is recovering from the pandemic, the analyst notes, but the transaction levels are lagging. 

The analyst attributes the lag to macro uncertainty and inflationary pressures, which in turn is leading to softer than expected EFT revenue and lower high-margin DCC transactions.

Based on the above, the analyst lowered the EBITDA and EPS estimates for FY23/FY24. 

Tandon trimmed the FY23 EPS estimate to $7.33 (from $7.40) and lowered the FY24 estimate to $8.30 (from $8.85). 

While Tandon expects NT headwinds to persist, the analyst expects growth and profitability to bounce back once European travel trends normalize.

Overall, the analyst notes that while the global travel recovery has been choppy due to economic headwinds, EEFT has weathered the storm well and is poised for a return to consistent low double-digit revenue growth with sustained EBITDA margin expansion as business conditions improve and global leisure travel normalizes. 

Price Action: EEFT shares are trading lower by 0.12% to $84.58 on the last check Wednesday.