Analysts Cut Price Targets On Paysafe Post Q3 Miss

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  • Analysts lowered price targets on Paysafe PSFE following Q3 miss and slashed FY21 outlook.
  • RBC Capital analyst Daniel Perlin lowered PT to $9 from $15, implying a 112.3% upside, and maintained an Outperform. 
  • The analyst notes that the company's Q3 and guidance were "disappointing" as Paysafe's Digital Wallet segment has come under pressure from open banking/direct to bank apps in Europe, creating substitute goods for its "core wallet," resulting in some share loss. 
  • Regulation in Germany and Holland, two key markets, makes gaming operators more challenging to profit while limiting the number of licenses available. 
  • The analyst also argues that pricing needs to be reset in certain markets/tiers to be more competitive.
  • Cowen analyst George Mihalos downgraded Paysafe to Market Perform from Outperform with a PT of $7, down from $14, implying a 65.1% upside. 
  • The analyst cites its 2021 guidance cut driven by the weaker trends across its Digital Wallet business, which is its "most differentiated and higher-value offering." 
  • Mihalos adds that a turnaround in the segment, which is being impacted by both regulatory and internal factors, will take time until late 2022 at the earliest and limit the upside on the stock. 
  • Evercore ISI analyst David Togut downgraded Paysafe to in-line with Outperform with a $4 price target, implying a 5.7% downside.
  • Credit Suisse analyst Timothy Chiodo lowered the price target to $4 from $9 and kept a Neutral rating.
  • Paysafe's updated 2022 outlook calls for revenue and EBITDA roughly 10%-13% and 22%-25% below prior Street expectations, respectively, Chiodo notes.
  • The headwinds are most pronounced within the Digital Wallets segment, a segment that had a leadership change during Q3 and had introduced risk associated with the previously guided outlook, the analyst adds.
  • Price Action: PSFE shares traded higher by 2.59% at $4.35 in the premarket session on the last check Friday.
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Posted In: Analyst ColorNewsPenny StocksDowngradesPrice TargetReiterationAnalyst RatingsTechBriefs
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