On Monday, Mizuho Securities adjusted its outlook for Bill.com Holdings Inc. (NYSE: NYSE:BILL), reducing the price target to $60 from $65, while maintaining a Neutral rating on the company's stock. The adjustment comes in the wake of the company's fiscal third-quarter earnings, prompting revisions to the financial model and estimates by the firm.
The updated estimates by Mizuho include an increased forecast for Bill.com's FY24 revenue, now set at $1.271 billion, up from the previous $1.245 billion. Additionally, the non-GAAP operating income projection for the company has been raised to $181 million from the earlier estimate of $149 million. These revisions reflect a cautiously optimistic view of the company's financial performance.
Despite the positive adjustments to revenue and operating income, Mizuho notes that Bill.com is likely to face ongoing challenges due to the broader economic environment. The firm anticipates that macroeconomic pressures will continue to impact the total payment volume (TPV) and the take rate expansion in the near term. This concern is compounded by a perceived decline in financial institution (FI) customers, which raises questions about Bill.com's long-term strategy to grow its FI channel presence.
The competitive landscape is also a factor in Mizuho's assessment, with the launch of QuickBooks Bill Pay by Intuit (NASDAQ:INTU) mentioned as a potential threat to Bill.com's market position. The lowered price target to $60 reflects a combination of these concerns, including a de-rating among software peers and uncertainties surrounding Bill.com's partnership with Bank of America (NYSE:BAC). The new price target implies a 5x enterprise value to next twelve months (EV/NTM) revenues ratio.
InvestingPro Insights
Following Mizuho Securities' recent update on Bill.com Holdings Inc. (NYSE: BILL), insights from InvestingPro provide additional context for investors. Bill.com's management has been proactively buying back shares, signaling confidence in the company's value. Moreover, with a strong balance sheet that holds more cash than debt, Bill.com is positioned to navigate the economic landscape effectively. Despite a challenging broader economic environment, Bill.com's gross profit margins remain impressive at 85.76%, indicating robust underlying business efficiency in the last twelve months as of Q3 2024.
InvestingPro data also reveals a substantial revenue growth of 29.06% in the same period, which supports the optimistic revenue forecasts by Mizuho. However, it's important to note that the company's P/E ratio stands at -114.72, reflecting market skepticism about its current earnings. Additionally, the stock has experienced significant price volatility, with a 26.23% drop over the last three months, which aligns with Mizuho's concerns about market conditions and competitive threats.
For investors seeking a more in-depth analysis, there are over 17 additional InvestingPro Tips available, which delve into various aspects of Bill.com's financial health and market performance. To access these insights, visit: https://www.investing.com/pro/BILL. And remember, by using the coupon code PRONEWS24, you can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering even more value as you navigate your investment decisions.
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