Summary
- Despite challenges, Paysafe is well-positioned for a rebound in FY 2023.
- Merchant solutions and US SMB growth provide potential catalysts, but caution needed due to high debt level and forex and interest rate risks.
- Paysafe is trading at an attractive discount to my modelled target price, presenting a buy opportunity.
Founded in 1996, Paysafe (NYSE:PSFE) is a global payment platform. Through its well-known services, Skrill and Neteller, it enables individuals to do secure money transfers and online purchases through various payment methods. It also provides PCI-compliant payment processing tools for merchants across different sizes. Paysafe has processed transactions across different verticals, such as online betting, e-commerce, gaming, and financial services.
It went public on NYSE in 2021 and since then, shares performance has been underwhelming. Since the middle of last year, the stock has lost almost a third of its value, and YTD, is down by +24% and trading at ~$11 per share. Though Paysafe has been a relatively mature and cash-rich business, top-line growth has been stagnant while earnings have been in the negatives as the business was facing various macro headwinds.
There seems to be a potential rebound in FY 2023, especially as Paysafe achieved strong Q1 results and guided to a 6% – 7% YoY growth for the full year, the best outlook since IPO. My model suggests that Paysafe is currently trading a significant discount to the target price.
In this first coverage, I give Paysafe an overweight rating. I anticipate a few catalysts in play that may deliver outperformance, while also being slightly cautious about the development of several risk factors.
READ FULL ARTICLE HERE!
