UBS has revised its outlook on Dutch payments giant Adyen, downgrading the firm to neutral with a new price target of €854, a significant drop from its previous €1,641 12-month target.
This decision comes in the wake of Adyen's lacklustre financial performance in the first half of 2023, attributed to heightened competition in the online payments sector.
Adyen, once a disruptor in the payments market, now finds itself in a competitive pricing arena alongside rivals like Stripe and Braintree.
UBS analysts stated that Adyen can either match its competitors' aggressive pricing strategies or potentially see a decline in transaction volume growth.
In the first half of 2023, Adyen opted for the latter, leading to a decline in volume growth from 41% in the first half of 2022 to just 23% in 2023.
This slowdown was particularly pronounced in North America, where net revenue growth nearly halved to 23%.
Despite these challenges, Adyen remains committed to its mid-term growth guidance, targeting figures in the mid-twenties to low thirties.
UBS, however, remains sceptical.
The bank cites limited visibility on the easing of the competitive landscape and anticipates further slowdowns for the rest of 2023.
Financially, UBS has adjusted its 2023/24 EBITDA estimates for Adyen, projecting reductions of 12% and 21% respectively.
Following a 5% miss on revenues UBS has also trimmed its revenue growth forecasts from 26% and 29% to 21% and 24% for 2023 and 2024.
Adyen shares were swapping for €815.8 att the time of writing, marking a 38% year-to-date discount.