On Wednesday, DA Davidson adjusted its outlook on Repay Holdings (NASDAQ:RPAY) Corporation (NASDAQ:RPAY), a leading provider of payment processing solutions. The firm's analyst revised the shares target downward to $14 from the previous $16 while sustaining a Buy rating on the stock.
Repay reported its third-quarter results earlier today, which aligned with DA Davidson's revenue projections and exceeded the forecast for adjusted EBITDA by 1%.
The quarter's performance was notably boosted by an unexpected increase in political media spending within the Business Payments segment. In light of this quarter's results, Repay's management has reaffirmed their financial guidance for 2024.
Following this announcement, DA Davidson has made the decision to adjust its annual forecasts for Repay for the years 2024 through 2026. Despite these changes, the firm maintains a positive outlook on the company, as reflected in the continued Buy rating.
The analyst from DA Davidson provided insight into the rationale behind the revised price target, stating, "This afternoon, Repay reported 3Q results with revenue matching our forecast and adjusted EBITDA 1% above our forecast. The quarter was aided by a larger than expected benefit from political media spend in the Business Payments segment.
With results, management affirmed their prior 2024 financial guidance ranges. Following the update, we are trimming our annual forecasts for 2024 to 2026. We are maintaining our BUY rating on Repay but trimming our price target to $14 (from $16)."
The revised price target and forecasts take into account the most recent financial data and the company's performance trajectory. Repay's stock will continue to be monitored by investors and analysts alike as the company progresses towards its 2024 financial goals.
In other recent news, REPAY Holdings Corporation has announced promising Q3 results and a positive outlook for 2025. The company reported a 6% increase in revenue, reaching $79.1 million, and a 9% rise in gross profit. Adjusted EBITDA also saw a 10% growth, totaling $35.1 million, alongside a significant free cash flow of $48.8 million, marking a 139% conversion rate.
These results reflect REPAY's strategic improvements in market strategies, client services, and product development, leading to key client additions and partnerships. The company also raised its 2024 revenue forecast to between $314 million and $320 million, with an adjusted EBITDA projection of $139 million to $142 million.
Despite facing headwinds from normalizing consumer spending and client attrition, REPAY is anticipating growth in FY 2025, focusing on recurring revenue streams and strategic initiatives. The Business Payments segment, in particular, has shown significant growth, primarily driven by new enterprise clients. These are the recent developments in REPAY's financial performance and strategic direction.
InvestingPro Insights
To complement DA Davidson's analysis of Repay Holdings Corporation (NASDAQ:RPAY), InvestingPro data offers additional context for investors. Despite the recent price target adjustment, Repay's market capitalization stands at $822.06 million, with a price-to-book ratio of 1.01 as of the last twelve months ending Q2 2024, suggesting the stock may be trading close to its book value.
InvestingPro Tips highlight that Repay's net income is expected to grow this year, and analysts predict the company will be profitable this year. This aligns with DA Davidson's maintained Buy rating, indicating potential upside despite the lowered price target. Additionally, Repay's liquid assets exceed short-term obligations, which could provide financial flexibility as the company works towards its 2024 goals.
It's worth noting that Repay's revenue growth was 5.3% over the last twelve months, with a strong gross profit margin of 76.99%. While the company was not profitable over the last twelve months, the expected turnaround in profitability could be a key factor for investors to watch.
For those seeking a deeper dive into Repay's financials and prospects, InvestingPro offers 11 additional tips, providing a more comprehensive view of the company's potential.
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