Amid Mixed Signals, Paysafe's Growth Trajectory Gets a Nod from Top Analysts

RBC Capital analyst Daniel Perlin maintained Paysafe Ltd PSFE with a Sector Perform and raised the price target from $17 to $19.

PSFE's print and guide support management's continued strategy to drive increased cross-selling (over 150 wins across the entire portfolio), improved retention rates (>100% vs. being down last year), and steady growth in engagement (with average transactions per active user up ~30% Y/Y). 

SMB remains resilient; however, recent development has been led by its third-party indirect channel, which pressured merchant-adjusted EBITDA margins (contracting) by ~120bps Y/Y. 

However, e-commerce growth was in the high teens, which management expects to help offset margin compression in the second half.

The analyst estimates revenue of $1.601 billion in FY23 (prior $1.593 billion) and $1.705 billion in FY24 (prior $1.691 billion). He projects adjusted EPS of $1.61 in FY23 (prior $1.09) and $1.33 in FY24 (prior $0.95).

Susquehanna analyst James Friedman reiterated Paysafe with a Neutral and raised the price target from $15 to $16.

PSFE's simplified go-to-market strategy is working, expressed in accelerating growth in both Merchant Acquiring and Digital Wallet. Management noted the excellent July and raised the year, anticipating a further acceleration in the second half. 

Further out, they reiterated confidence in delivering double-digit growth targets. On the Merchant side, strength in eCommerce, North American iGaming, and SMB helped. In contrast, on the Digital Wallets side, stable three-month active users and increased average transactions helped deliver the upside—two areas of concern. 

The wallet growth got support from Float revenue, and Merchant got a boost from third-party partner channel (ISO) volume, which diluted Merchant margins. 

The analyst modeled FY23 revenues of $1.60 billion ($1.59 billion prior) and FY24 revenues of $1.74 billion ($1.69 billion prior).

BMO Capital analyst James Fotheringham maintained Paysafe with an Outperform and lowered the price target from $80 to $64.

PSFE shares rose +24% on a modest rise to FY23 guidance. The analyst remains constructive on the business' long-term fundamentals, with vital 2Q metrics all in line or ahead of his forecasts and consensus. 

Growth initiatives and ongoing sales transformations will likely drive more robust revenue growth through the second half.

The analyst estimates revenue of $1.607 billion in FY23 (prior 1.590 billion) and $1.765 billion in FY24 (prior 1.743 billion). He projects core EPS of $3.01 in FY23 (prior $2.96) and $4.26 in FY24 (prior $4.21).

Credit Suisse analyst Timothy Chiodo reiterated Paysafe an Underperform and raised the price target from $14.5 to $15.

Price Action: PSFE shares were trading lower by 5.29% at $13.87 on the last check Wednesday.