On Thursday, Susquehanna maintained a Positive rating on AvidXChange Holdings (NASDAQ: AVDX), while increasing the company's price target from $15.00 to $16.00. The firm recognized AvidXChange as a distinct "self-help" narrative in the industry, highlighting its potential for growth through the transition from traditional check-based transactions to electronic payment (ePay) software and virtual cards.
The analyst noted AvidXChange's continued improvement in key financial metrics. The company's transaction yield saw a year-over-year increase of 13.8%, up from 12.7% in the previous quarter. Furthermore, gross margins expanded by 650 basis points year-over-year, reaching 71.4%, compared to 70.0% in the last quarter. AvidXChange also reported an EBITDA margin that exceeded expectations at 15%, an improvement from 12% in the last quarter.
The positive trends in AvidXChange's financial performance are attributed to the ongoing shift in its transaction volume. Approximately 55% of the company's volume is currently processed through checks, and as this transitions to ePay software and virtual cards, the firm expects to see enhanced take rates, revenue growth, and profit margins.
Susquehanna's revised price target to $16.00 reflects a modest raise in estimates based on the company's performance and the sustained execution of its business strategy. The firm's stance remains optimistic regarding AvidXChange's future, as the company leverages technological advancements to modernize payment processes and improve financial outcomes.
InvestingPro Insights
Following Susquehanna's positive outlook on AvidXChange Holdings (NASDAQ: AVDX), recent data from InvestingPro reinforces the company's growth trajectory. AvidXChange's market capitalization stands at a robust $2.59 billion, indicating significant investor confidence. In line with the analyst's observations, the company has been experiencing a solid revenue growth rate of 20.76% in the most recent quarter of 2023, underscoring its expanding market presence.
InvestingPro Tips suggest that while AvidXChange has not been profitable over the last twelve months, with a negative adjusted P/E ratio of -54.72, analysts predict the company will turn profitable this year. This aligns with the company's strong return over the last three months, which has been an impressive 18.93%. Moreover, AvidXChange does not currently pay a dividend, allowing the firm to reinvest its earnings back into growth and product development.
For readers looking to delve deeper into AvidXChange's financials and future outlook, there are additional InvestingPro Tips available at: https://www.investing.com/pro/AVDX. Don't forget to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With these insights, investors can better assess AvidXChange's potential in the evolving digital payment landscape.
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