On Thursday, Citi updated its outlook on Wise (LON:WISEa) plc (WISE:LN) (OTC: WPLCF), increasing the price target to GBP7.70 from GBP6.80, while reiterating a Sell rating on the stock. The adjustment comes amidst Citi's analysis of the company's competitive position and revenue growth prospects.
The Citi analyst pointed out that despite the price target hike, the firm maintains a non-consensus Sell stance on Wise. The rationale behind this position is based on anticipated continued fee pressures and limited operating leverage resulting from competitive market dynamics. This perspective is further supported by a recent downgrade in the company's mid-term guidance.
Wise is expected to face slower cross-border revenue growth, particularly in its core corridors, according to Citi's forecast. The analyst suggests that a larger portion of the company's growth will likely stem from interchange rather than its mainstay cross-border remittance services. The underlying growth of Wise is seen as multi-faceted, but concerns have been raised about the sustainability of its valuation.
Citi highlights that Wise's valuation, approximately 44 times CY 2026 underlying PE, does not seem justified given the forecasted ~11% underlying earnings compound annual growth rate (CAGR), the deceleration in core cross-border remittance, and the broader issue of the company's lack of a competitive moat, as indicated by the ongoing need for fee reductions.
The updated price target reflects the firm's analysis of the financial and operational challenges that Wise may encounter. The London-listed global technology company, known for its international money transfer service, has been navigating a fiercely competitive fintech landscape, where pricing and service offerings are critical for maintaining market share.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.