On Monday, HSBC revised its stock price target for Wise plc (WISE:LN) (OTC: WPLCF), a London-listed financial technology company, lowering it to £11.50 from the previous £13.00. Despite the reduction, the firm has maintained a "Buy" rating on the stock.
The adjustment follows Wise's latest quarterly trading update, which HSBC found disappointing in terms of the company's core business performance, marking the first time in two years that results have not met expectations.
HSBC notes that this may require the market to recalibrate expectations for slower volume and revenue growth in the core business, as well as an increased contribution from net interest income (NII) to the revenue and EBITDA mix over the next three years.
HSBC believes that potential catalysts for Wise's stock remain, anticipating a recovery in volume per customer by the first quarter of fiscal year 2026 and a gradual rise in the take rate. The firm suggests that the share price, which has fallen 15% since the trading statement was released, compared to a 2% decrease in the FTSE All-Share Index, may overstate the significance of the reduced core business EBITDA and overlook the higher NII.
The current valuation of Wise, with an FY25e enterprise value to EBITDA (EV/EBITDA) multiple of 12 times and a price-to-earnings (PE) ratio of 22 times—or 21 times and 33 times, respectively, when excluding NII—is considered by HSBC to be reasonable.
This is in light of the expected annual growth rates of around 20% for core business revenue, EBITDA, and earnings per share (EPS). HSBC concludes that Wise's platform business model continues to offer the advantages that are typically sought after in such companies.
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