Strategic Analysis By Analyst: Diverse Outcomes For Fintech Stocks In Current Market Conditions

BMO Capital Markets analyst Rufus Hone initiated coverage on several fintech stocks.

At Market Perform rating, the analyst commenced coverage at Repay Holdings Corp RPAY with a price target of $9, Remitly Global Inc RELY at a $25 price target, The Western Union Co WU at $12, AvidXchange Holdings Inc AVDX at $11 and i3 Verticals Inc IIIV at $24 price target.

WU: The analyst says the investors should wait for more evidence of durable revenue growth, mainly once easier prior-year comps are lapped (i.e., by H2 FY24). While the C2C segment is seeing benefits from "Evolve 2025" initiatives, the analyst says it is too early to get comfortable on a durable EBIT/EPS growth trajectory.

The analyst estimates core EPS of $1.74 for FY23, $1.70 for FY24, and $1.71 for FY25. 

RPAY: The analyst writes that RPAY's spending volume is largely non-discretionary and sees incremental tailwinds for gross profit growth heading into FY24. However, the company's smaller scale, lower degree of diversification, lower liquidity, and potential earnings impact from refinancing its convertible note remain concerns.

The analyst sees Core EPS of $0.80 for FY23, $0.88 for FY24, and $0.96 for FY25, vs. street view of $0.82, $0.90 and $1.01, respectively.  

RELY: The analyst remains concerned about investors viewing additional top-of-funnel investments and rising sequential marketing spend in Q4 with caution and will be closely watching for indications that marketing investments are paying off via accelerating customer growth.

Hone estimates core EPS of $0.14 for FY23, $0.45 for FY24, and $0.94 for FY25.

At an Outperform rating, Hone initiated coverage at Hamilton Insurance Group Ltd HG with an $18 price target, Fleetcor Technologies Inc FLT at a $300 price target and Fiserv Inc FI at a $152 price target.

FLT: The analyst says FLT is expected to benefit from the secular digitization of B2B payments and several vertical-specific tailwinds while executing its successful M&A strategy.

The analyst sees Core EPS of $16.97 for FY23, $20.91 for FY24, and $25.44 for FY25.

FI: Hone views the company's scale in distribution as a key competitive advantage and expects organic growth to benefit from a shift towards a higher quality and higher-growth mix of tech/software-enabled products with ARPU upside.

The analyst sees Core EPS of $7.56 for FY23, $8.75 for FY24, and $10.25 for FY25, vs. street view of $7.49, $8.58 and $9.88, respectively.  

HG: The analyst projects the company to benefit from over 50% of its portfolio being built during a combination of the "hard market/pricing-power" plus separately, low insurance claim frequency/volume onset of pandemic years 2020-2021.

Photo Via Fiserv