On Thursday, B.Riley maintained a Buy rating on shares of Sezzle Inc (NASDAQ: SEZL) and increased its price target to $372.00, up from the previous $353.00. The adjustment comes in the wake of a recent decline in Sezzle's share value following the release of a short report on December 18.
The analyst at B.Riley challenged the short report's assessment of Sezzle, highlighting what they consider to be conceptual misunderstandings of the company's fundamentals and the buy now, pay later (BNPL) sector.
The analyst believes that the short report lacked new investment insights and demonstrated a misunderstanding of the unit economics within the BNPL industry, as well as the distinctions between key players in the market. This perspective led to the decision to raise the price target slightly, reflecting an undervalued estimation for the holiday shopping season's impact on Sezzle's financials.
Moreover, the analyst pointed to app download data for Sezzle, which suggests that the company's growth is surpassing the overall expansion of the BNPL industry. This trend is expected to contribute to long-term increases in Sezzle's earnings power. The new price target of $372 is based on a 20 times multiple of the firm's 2026 earnings per share (EPS) estimate.
At the time of the report, Sezzle's shares were trading at a 13 times multiple of B.Riley's 2026 EPS estimate. The analyst views this as a modest valuation for a company with a high-growth, high-return-on-assets (ROA) subscription payment business model, implying that the stock may be undervalued.
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