On Friday, UBS adjusted its price target for Wise plc (WISE:LN) (OTC: WPLCF) shares, a UK-based financial technology company, lowering it to £10.00 from the previous £10.20. Despite the reduction, the firm has kept its buy rating on the stock.
The change in the price target reflects a new valuation approach based on a sum-of-the-parts (SOTP) analysis for the fiscal year 2026. The analyst has applied a 25 times multiple to Wise's forecasted operating EBITDA, which is a decrease from the previous 27 times. Additionally, a 12 times multiple has been used for the company's expected interest income in FY2026.
The revision was driven by an increase in Wise's underlying income and EBITDA, while the underlying profit before tax (PBT) remains the same. The multiples on operating EBITDA were contracted by two turns to better align with the high volatility observed around the company's earnings.
This adjustment brings the multiple-to-growth (MTG) ratio to 0.7x, which is now consistent with the industry average. The analyst considers this a conservative estimate.
The new price target is based on an implied 18 times total EBITDA, which adjusts to 23 times when factoring in share-based compensation (SBC). The updated valuation aims to provide a 12-month forecast for Wise's share price, taking into account the present economic environment and market conditions.
In other recent news, several financial institutions have revised their outlook on Wise plc. Goldman Sachs (NYSE:GS) lowered its price target for Wise to GBP11.10 from GBP13.00, following the company's full fiscal year 2024 results and revised medium-term goals. Despite the reduction, Goldman Sachs maintained a Buy rating, reflecting a positive view on Wise's stock potential.
Concurrently, Barclays (LON:BARC) upgraded its rating of Wise to Overweight and raised its price target from £8.00 to £10.00, citing the company's growth potential. Morgan Stanley (NYSE:MS) also maintained its Overweight rating on Wise with a £10.70 price target, aligning its revenue forecast for the fourth quarter of 2024 closely with market expectations.
Jefferies expressed confidence in Wise, maintaining a Buy rating and raising its price target to £11.23, following the appointment of Emmanuel Thomassin as CFO. Additionally, Jefferies adjusted its EBITDA forecast for Wise, which now stands 29% higher than earlier estimates.
These are recent developments reflecting the financial fundamentals and growth prospects of Wise, as recognized by several prominent financial institutions.
InvestingPro Insights
Wise plc (OTC: WPLCF) has been a topic of discussion among investors, particularly in light of recent price movements and financial metrics. According to InvestingPro data, Wise boasts a market capitalization of approximately $9.76 billion USD, indicating its significant presence in the fintech sector. The company's Price to Earnings (P/E) ratio stands at 33.17, reflecting expectations of future earnings growth. Moreover, the PEG ratio, which combines the P/E ratio with expected earnings growth, is notably low at 0.14, suggesting that the stock may be undervalued in terms of its growth potential.
InvestingPro Tips highlight that Wise is expected to see net income growth this year, aligning with the positive outlook on its earnings. Additionally, despite a recent downturn in its stock price—evidenced by a 12.79% drop over the last week—analysts remain optimistic about the company's profitability, with predictions of it being profitable over the last twelve months. It's also worth noting that Wise is trading at a high Price/Book multiple of 10.33, which investors should consider in the context of the company's asset valuation and growth prospects.
For those keen on delving deeper into Wise's financials and stock performance, there are additional InvestingPro Tips available at https://www.investing.com/pro/WPLCF. Subscribers can use the coupon code PRONEWS24 to get an extra 10% off on a yearly or biyearly Pro and Pro+ subscription, gaining access to an extensive array of insights that could inform investment decisions. With several more tips listed on InvestingPro, investors have the opportunity to explore a comprehensive analysis of Wise's financial health and market position.
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