On Wednesday, Citi reaffirmed its Buy rating on Flywire (NASDAQ:FLYW) with a steady price target of $36.00. The payment solutions provider reported earnings that surpassed estimates for the March 24 quarter, attributed to robust performance from its U.K. higher education and travel accommodation clients in Europe and Asia.
Despite facing foreign exchange challenges, Flywire has kept its full-year revenue forecast consistent on an FX-neutral basis, anticipating approximately 30% year-over-year growth at the midpoint. However, it has adjusted the reported revenue growth outlook downward by about 2 percentage points to account for these FX headwinds.
In light of a policy change in Canada, the company has also integrated an additional impact into its financial outlook. Citi's analysis highlights several positive indicators for Flywire, including the healthcare vertical's regained momentum, which is expected to contribute to second-half revenue. Additionally, the travel vertical achieved a record in annual recurring revenue (ARR) agreements during the quarter. The education sector also saw strong bookings, and Flywire has increased its go-to-market resources across various business verticals.
Despite the reduced reported revenue outlook, Citi suggests that any resultant weakness in Flywire's stock could present a buying opportunity for investors. The firm underscores that Flywire's growth strategy remains intact and that the stock is attractive when compared to its growth prospects. The company's performance and strategic initiatives continue to garner positive attention from Citi, reinforcing the Buy rating.
InvestingPro Insights
In the context of Citi's reaffirmed Buy rating and positive outlook on Flywire, let's consider some relevant InvestingPro data and tips that could further inform investors. Flywire's market capitalization stands at a robust $2.55 billion, reflecting investor confidence in the company's market position. Despite challenges, the company has demonstrated significant revenue growth, with a 39.3% increase in the last twelve months as of Q4 2023. This growth trajectory is supported by a high gross profit margin of 63.45% in the same period, indicating strong operational efficiency.
From an investment analysis perspective, the InvestingPro Tips highlight that Flywire is expected to see net income growth this year, which could be a positive signal for future profitability. Additionally, the company's liquid assets surpass its short-term obligations, suggesting a solid financial footing for managing its liabilities. As an added value for our readers, there are more InvestingPro Tips available, providing deeper insights into Flywire's financial health and stock performance. To explore these tips and gain a competitive edge in your investing strategy, visit InvestingPro and use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
While the stock has faced a downturn over the last month with a 12.74% decline, analysts predict that the company will become profitable this year, which could signal a reversal of recent trends. It's worth noting that Flywire does not pay a dividend, which may influence the investment decisions of income-focused shareholders. Keeping in mind these insights, investors might find additional reasons to consider Flywire as a potential addition to their portfolios, especially if they are looking for growth opportunities in the fintech sector.
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