Analysts Cut Price Targets On Paysafe Post Q3 Miss

Analysts lowered price targets on Paysafe PSFE following Q3 miss and slashed FY21 outlook.
RBC Capital analyst Daniel Perlin lowered PT to $9 from $15, implying a 112.3% upside, and maintained an Outperform.
The analyst notes that the company's Q3 and guidance were "disappointing" as Paysafe's Digital Wallet segment has come under pressure from open banking/direct to bank apps in Europe, creating substitute goods for its "core wallet," resulting in some share loss.
Regulation in Germany and Holland, two key markets, makes gaming operators more challenging to profit while limiting the number of licenses available.
The analyst also argues that pricing needs to be reset in certain markets/tiers to be more competitive.
Cowen analyst George Mihalos downgraded Paysafe to Market Perform from Outperform with a PT of $7, down from $14, implying a 65.1% upside.
The analyst cites its 2021 guidance cut driven by the weaker trends across its Digital Wallet business, which is its "most differentiated and higher-value offering."
Mihalos adds that a turnaround in the segment, which is being impacted by both regulatory and internal factors, will take time until late 2022 at the earliest and limit the upside on the stock.
Evercore ISI analyst David Togut downgraded Paysafe to in-line with Outperform with a $4 price target, implying a 5.7% downside.
Credit Suisse analyst Timothy Chiodo lowered the price target to $4 from $9 and kept a Neutral rating.
Paysafe's updated 2022 outlook calls for revenue and EBITDA roughly 10%-13% and 22%-25% below prior Street expectations, respectively, Chiodo notes.
The headwinds are most pronounced within the Digital Wallets segment, a segment that had a leadership change during Q3 and had introduced risk associated with the previously guided outlook, the analyst adds.
Price Action: PSFE shares traded higher by 2.59% at $4.35 in the premarket session on the last check Friday.

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