Analysts Tread Cautiously On BILL Holdings Citing Dim Guidance Concerns: Review

Needham analyst Scott Berg reiterated a Buy rating on BILL Holdings, Inc. BILL, lowering the price target to $100 from $200.

Following a street-beating performance in Q1, BILL cut the revenue outlook for FY24 to $1.205 billion-$1.245 billion (from $1.288 billion-$1.306 billion) vs. $1.300 billion street view and revised the adjusted EPS forecast to $1.64-$1.97 (from $1.82-$1.97) vs. consensus of $1.95.

According to the analyst, the lagging outlook was due to the payment mix favoring lower-cost transactions, reducing overall revenue growth from 22.6% to 15.7% despite the upside to 1Q guidance.

The negative payment impact comes from both core Bill TPV and from Divvy card spending, the analyst adds.

Sales commentary remained positive, including another 4K core Bill customer additions expected in 2Q, which is in line with recent trends suggesting the lower revenue growth trajectory is truly macro-driven, which should rebound as these pressures subside, Berg notes.

The analyst lowered the FY24 EPS estimate to $1.81 from $1.91̣. Berg lowered the FY24 revenue forecast to $1.225 billion from $1.297 billion.

KeyBanc Capital Markets analyst Alex Markgraff downgraded BILL to Sector Weight from Overweight, citing that macro headwinds/sentiment will continue to challenge the NT performance of shares.

The analyst writes that Bill.com can be an LT category winner with a solid management team in place, though there is a lack of catalysts for shares at this juncture.

The analyst lowered FY24 revenue estimate to $1.223 billion from $1.307 billion, cutting operating income forecasts to $134.9 million from $155.9 million.

Mizuho analyst Siti Panigrahi reiterated a Neutral rating on BILL, lowering the price target to $65 from $95.

The company's downbeat guidance was owing to pressure on divvy volumes amongst larger SMB/mid-market customers and reduced ad valorem payment usage (virtual cards and FX wire transfers) as suppliers have become more cost-sensitive, Panigrahi notes. 

The analyst writes that proactive downward adjustments to card limits by BILL to limit adverse credit exposure additionally contributed to moderated card payment volume growth and the lowered FY24 guide.

The analyst lowered the FY24 EPS estimate to $1.69 from $1.97. Panigrahi reduced its FY24 revenue estimate to $1.233 billion from $1.306 billion.

Piper Sandler analyst Brent A. Bracelin reiterated the Overweight rating on BILL, lowering the price target to $95 from $165.

The analyst lowered FY25 growth estimates to 13% (vs. 27% prior) based on model sensitivity to the macro.

However, the analyst mentioned that the medium-term opportunity and risk reward relative to peers at >30% premiums is compelling enough for an Overweight rating despite heightened execution risks and disappointing guidance.

The analyst lowered the FY24 EPS estimate to $1.81 from $1.93, trimming the FY24 revenue estimate to $1.205 billion from $1.30 billion.

Price Action: BILL shares are trading lower by 26.75% to $65.74 on the last check Friday.