On Wednesday, Benchmark maintained a positive outlook on Payoneer (NASDAQ: PAYO) shares, increasing the stock's price target to $12 from the previous $10, while keeping a Buy rating. The decision comes as a response to the company's recent performance and future potential.
Benchmark's analysis suggests that despite Payoneer's share price having doubled over the past three months, the stock still trades at a relatively modest 9.7 times the projected FY26 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). The new price target is based on a 13 times EV/EBITDA multiple of the forecasted FY26 adjusted EBITDA of $315.4 million.
The firm's stance reflects confidence in Payoneer's capacity to grow, as indicated by the analyst's comment on the stock being undervalued in relation to its growth prospects. The adjustment in the price target is indicative of the firm's expectation that Payoneer will continue to perform well financially.
The updated valuation of Payoneer comes after careful consideration of the company's financial trajectory, particularly looking forward to the fiscal year 2026. Benchmark's methodology in setting the new price target involves a detailed assessment of Payoneer's adjusted earnings and market position.
The analyst's comment encapsulates the rationale behind the maintained Buy rating and the raised price target, emphasizing the company's strong growth prospects as a significant factor. Benchmark's revised target suggests that Payoneer's financial outlook remains robust, with expectations of continued upward momentum.
In other recent news, Payoneer has reported a significant 19% increase in total revenue for the third quarter of 2024, reaching a noteworthy $248 million. This coincides with a robust 25% growth in total volume and an adjusted EBITDA of $69 million, marking a 28% margin. The company's B2B segment has shown a strong performance, expanding by 57% and contributing to nearly a quarter of the quarter's revenue.
In addition to these developments, Payoneer's customer funds held have risen by 13% to $6.1 billion, and interest income stands at $65 million. Consequently, the company has raised its revenue guidance for 2024 to between $950 million and $960 million.
Furthermore, Payoneer is in the process of acquiring a licensed Chinese payment service provider, which is expected to conclude in the first half of 2025. This acquisition is part of the company's strategic initiatives to drive continued growth and position itself for sustained success in the global payments industry.
InvestingPro Insights
Payoneer's recent market performance aligns closely with Benchmark's bullish outlook. According to InvestingPro data, the company has shown remarkable growth, with a 96.19% price total return over the last three months and a 98.08% return over the past six months. This surge in stock price is reflected in the InvestingPro Tip that Payoneer is trading near its 52-week high, with the current price at 99.52% of that peak.
The company's financial health appears strong, with a revenue of $900.06 million in the last twelve months as of Q2 2024, representing a 21.43% growth. Payoneer's profitability is also noteworthy, with an adjusted operating income of $144.38 million and an operating income margin of 16.04% for the same period.
However, investors should note that Payoneer is trading at a high earnings multiple, with a P/E ratio of 35.18. This valuation metric, coupled with the InvestingPro Tip that the RSI suggests the stock is in overbought territory, may warrant careful consideration for potential investors.
For those seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Payoneer, providing a deeper understanding of the company's market position and potential.
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