Friday, Piper Sandler has increased the stock price target for Bill.com Holdings Inc. (NYSE: NYSE:BILL) to $85 from the previous $60, while keeping an Overweight rating on the stock. The adjustment follows a report of accelerated core revenue growth for the company.
On Friday, Bill.com demonstrated a stronger performance than in recent periods, with a 19% year-over-year increase in core revenue. This growth is attributed to significant new additions in accounts payable/accounts receivable services, which saw an increase of 4,800 in the quarter, and a 26% year-over-year growth in Total (EPA:TTEF) Payment Volume (TPV) in the Spend & Expense segment.
The company achieved an 8% operating margin excluding float, which is a 10 percentage point improvement compared to the same period last year. Furthermore, Bill.com's core TPV per customer grew by approximately 2% year-over-year, indicating a stabilization within its customer base.
Piper Sandler's analysis suggests that if the 19% growth rate can be sustained into the first quarter of 2025, which is traditionally a challenging comparison period, Bill.com's stock could see a potential re-rating. Investors may anticipate a faster and more credible path to achieving 20% core revenue growth, along with the potential for underlying leverage excluding float.
The firm's five-year valuation methodology has been rolled forward, resulting in the revised $85 price target for Bill.com shares. This reflects confidence in Bill.com's ability to maintain its growth trajectory and improve financial performance.
In other recent news, Bill.com Holdings Inc. reported impressive fiscal first-quarter results, surpassing Wall Street predictions. The financial software company posted adjusted earnings of $0.63 per share, exceeding the analyst consensus of $0.50. Revenue also saw a rise, with an 18% YoY increase to $358.5 million, surpassing expectations of $348.36 million.
Looking forward, Bill.com has issued an optimistic outlook for the fiscal second quarter, forecasting adjusted earnings of $0.44-$0.48 per share on revenue of $355.5-360.5 million, which is above consensus estimates. The company also raised its full-year outlook, now projecting adjusted EPS of $1.65-$1.83 on revenue of $1.439-1.464 billion.
In other developments, core revenue, which consists of subscription and transaction fees, grew 19% YoY to $314.9 million. The company served 476,200 businesses at quarter-end, processing $80 billion in total payment volume, a 14% YoY increase. Lastly, during the quarter, Bill.com repurchased approximately 3.7 million shares for $200 million as part of its previously announced share buyback program.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Bill.com's financial performance and market position. The company's market capitalization stands at $6.82 billion, reflecting its significant presence in the financial technology sector. Bill.com's revenue for the last twelve months reached $1.34 billion, with a notable revenue growth of 18.54% over the same period. This aligns with the accelerated core revenue growth highlighted in the article.
InvestingPro Tips reveal that Bill.com holds more cash than debt on its balance sheet, which could provide financial flexibility as the company continues to expand its services. Additionally, the company boasts impressive gross profit margins, with InvestingPro data showing a gross profit margin of 85.24% for the last twelve months. This strong profitability metric supports the company's ability to invest in growth initiatives and potentially improve its operating margin, as mentioned in the article.
Investors should note that while Bill.com has shown strong recent performance, with a significant 42.06% return over the last three months, the stock is currently trading at a high earnings multiple. This valuation factor may be important for investors to consider alongside the growth prospects outlined by Piper Sandler.
For those seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Bill.com, providing deeper insights into the company's financial health and market position.
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