On Friday, Evercore ISI adjusted its outlook on shares of Euronet Worldwide (NASDAQ:EEFT), reducing the stock price target to $135 from $140, while still maintaining an Outperform rating on the stock.
Euronet's second-quarter earnings report revealed an adjusted EPS of $2.25, which, despite showing an 11% year-over-year growth, fell short of both Evercore ISI's and the consensus estimates, which were $2.39 and $2.30, respectively. The shortfall was mainly attributed to lower-than-expected revenues, particularly in the EFT and ePay segments.
The company's overall revenues saw a 6% increase on a constant currency basis, driven by a 10% growth in EFT processing and an 8% growth in Money Transfer. Still, the firm's adjusted EBITDA margins only increased by 40 basis points to 18.1% compared to the second quarter of 2023, missing Evercore ISI's and the consensus forecast by 70 basis points and 10 basis points, respectively.
Despite the earnings miss, Euronet's management has reiterated their guidance for adjusted EPS growth in 2024, projecting an increase of 10 to 15%. Evercore ISI has revised its adjusted EPS forecasts for the calendar years 2024, 2025, and 2026 to $8.70, $9.95, and $11.00, respectively, down from the previous estimates of $8.83, $10.10, and $11.15. The revision reflects an anticipation of lower EBITDA margins than previously estimated, although revenue estimates remain unchanged.
The new stock price target of $135 is based on a 14 times multiple of the projected CY25 EPS, as stated by Evercore ISI. Despite the reduction in the price target and earnings projections, the firm maintains its positive stance on Euronet Worldwide's stock with an Outperform rating.
In other recent news, Euronet Worldwide announced record-breaking earnings for the first quarter of 2024, with revenues of $857 million and adjusted earnings per share increasing by 47% to $1.28. The company also completed the acquisition of the MEPS ATM network from Payments Network (LON:NETW) Malaysia Sdn Bhd (PayNet), consolidating its position as the largest non-bank ATM operator in Malaysia.
Furthermore, the company received favorable analyst attention; Citi raised its price target from $120.00 to $135.00 and maintained a Buy rating, while DA Davidson increased its price target from $126 to $136, reiterating a Buy rating.
Wolfe Research upgraded Euronet's stock rating from Underperform to Peer Perform, acknowledging the company's strategic diversification efforts. In addition, Euronet expanded its board with the appointment of Sergi Herrero, bringing his extensive experience from the payment and technology sectors. These are recent developments for Euronet Worldwide.
InvestingPro Insights
As Euronet Worldwide (NASDAQ:EEFT) navigates through its financial journey, InvestingPro offers valuable insights that could help investors better understand the company's current market position. With a market capitalization of $4.57 billion and a P/E ratio standing at 16.54, the company exhibits a stable valuation in the market. Notably, the adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly lower at 16.02, suggesting a consistent earning power relative to its share price.
An encouraging sign for investors is the company's PEG ratio for the last twelve months as of Q1 2024, which is at 0.7. This figure indicates that the stock may be undervalued considering its earnings growth potential. Moreover, Euronet has shown a solid revenue growth of 9.64% during the same period, underpinning the company's ability to expand its financial top line.
Reflecting on the InvestingPro Tips, it is notable that Euronet's management has been actively engaged in share buybacks, which can often signal confidence in the company's future prospects. The stock is trading at a low P/E ratio relative to near-term earnings growth, which could be an attractive point for value investors.
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