PagSeguro Has 'Several Cyclical And Secular Tailwinds,' Says Bullish Analyst

PagSeguro Digital Ltd PAGS shares were rising Tuesday morning.

There appeared to be “several cyclical and secular tailwinds” that should drive the company’s revenue and earnings growth between 2024 and 2026, according to Evercore ISI.

The PagSeguro Digital Analyst: Sheriq Sumar upgraded the rating for PagSeguro Digital from In-Line to Outperform, with a price target of $18.

The PagSeguro Digital Thesis: The company’s total payment volume (TPV) growth is poised to accelerate from 12% in 2023 to 17% in 2024 and 13% in 2025, Sumar said in the upgrade note.

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PagSeguro Digital’s TPV was likely receiving a boost as the company “executes on its go-to-market strategy” and prioritizes high-value SMB merchants “by cross-selling value-added services and banking solutions,” the analyst stated.

“We also forecast net take rates to stabilize starting 2025 as low-value nano-merchant attrition decelerates,” Sumar added.

Sumar also expected margin pressure from financial expenses to ease “materially,” with declining interest rates in Brazil and “rising client deposits providing a cheaper source of funding for prepayment business.”

PAGS Price Action: Shares of PagSeguro Digital had risen by 4.67% to $14.57 at the time of publication on Tuesday.

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