Earnings release: Here’s why analysts cut their Paysafe Limited (NYSE:PSFE) price target to $3.25
Shareholders may have noticed that Paysafe Limited (NYSE:PSFE) filed its quarterly results this time around last week. The early response was not positive, with shares falling 8.9% to US$2.06 last week. Earnings are an important time for investors because they can follow a company’s performance, watch what analysts predict for the next year, and see if there has been a change in sentiment towards the company. So we’ve rounded up the latest post-earnings guidance to see what the estimates suggest for next year.
See our latest analysis for Paysafe
Based on the latest results, Paysafe’s seven analysts currently expect revenue in 2022 to be US$1.48 billion, which is roughly in line with the past 12 months. The loss per share should improve slightly, narrowing to US$2.47. Prior to this earnings announcement, analysts had modeled revenue of US$1.53 billion and losses of US$1.58 per share in 2022. While this year’s revenue estimates have fallen, there are also had a significant expansion in per-share loss expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 10% to US$3.25 as analysts were clearly concerned about the company following weaker revenue and earnings outlook. This is not the only conclusion we can draw from this data, however, as some investors also like to take into account the discrepancy in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Paysafe at US$5.00 per share, while the most bearish one values it at US$2.00. Notice the wide gap between analyst price targets? This implies to us that there is a fairly wide range of possible scenarios for the underlying activity.
Another way to view these estimates is in the context of the big picture, such as how the forecast compares to past performance, and whether the forecast is more or less optimistic compared to other companies in the industry. It’s also worth noting that the years of declining sales appear to have come to an end, with stable revenue expectations through the end of 2022. Historically, Paysafe sales have declined by approximately 1.1% per year over of the last year. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry should see revenue growth of 12% annually. So it’s pretty clear that even if revenue improves, Paysafe is still expected to grow slower than the industry.
The most important thing to remember is that analysts have raised their loss per share estimates for next year. Unfortunately, they have also lowered their revenue estimates, and our data indicates that revenue is expected to underperform the industry as a whole. Even so, earnings per share are more important to the intrinsic value of the company. The consensus price target fell measurably as analysts seemed unreassured by the latest results, leading to a lower estimate of Paysafe’s future valuation.
That said, the company’s long-term earnings trajectory is much more important than next year. We have estimates – from several Paysafe analysts – going out to 2024, and you can see them for free on our platform here.
You can also view our analysis of Paysafe’s balance sheet and find out if we think Paysafe is too leveraged, for free on our platform here.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.