BILL Holdings' Growth Prospects Clouded By Investment Pressures, Legal Concerns: Goldman Sachs Downgrades Stock

BILL Holdings, Inc BILL stock traded lower Friday after multiple firms lowered their price targets. The firms included Goldman Sachs, Keefe, Bruyette & Woods, Susquehanna, Baird, and Evercore ISI.

BILL Holdings reported fourth-quarter revenue of $343.67 million, up by 16.1% year-on-year, beating the analyst estimate of $325.83 million.  

For the first quarter, it expects revenue of $346 million-$351 million. It anticipates fiscal 2025 revenue of $1.415 billion-$1.450 billion (prior $1.267 billion-$1.277 billion)

Goldman Sachs: Analyst Will Nance downgraded the rating on BILL Holdings to Neutral (from Buy) with a price target of $54 (down from $86).

While Nance’s investor conversations leading up to earnings were negative, the buy-side revenue numbers were below the sell side.

The analyst writes that the incremental commentary around investments is likely to push out valuation support and is notable given the pressure on customer funds that the current interest rate curve implies over the next year.

While the company is guiding a return to over 20% growth in fiscal 2026 on the back of these investments, it reflects the expectation of a resumption in the take rate expansion in the back half of the year. Additionally, there is headline risk around potential litigation settlements related to Visa Inc V and Mastercard Inc MA if credit interchange comes under more significant pressure.

Given the higher levels of investments and the lower valuation support over the near term, Nance rerated the stock.

Since Nance added BILL Holdings to the Americas Buy List on January 11, 2022, the stock has plunged 76.1% versus the S&P500, which is up 19.3%, due to weaker-than-expected TPV per customer trends against a weaker macro backdrop and decreasing attachment to higher monetization payment methods.

In the current macro environment of elevated uncertainty and continued pressure on take rates, the analyst noted the near-term results are unlikely to be a catalyst for shares to resume outperformance.

Price Action: BILL stock traded lower by 5.99% at $47.70 at the last check on Friday.