Digital payments are a very on point trend. This is a growing segment where several companies such as Square and PayPal have benefited immensely by connecting businesses to consumers or consumers with each other via seamless payment processing.
Apart from these two giants there are myriad companies riding this wave. One such name is Paysafe (PSFE), another payments platform with a two-sided consumer and merchant network.
Paysafe is new to the stock market, and only went public at the end of March via a SPAC merger with the Foley Trasimene Acquisition Corporation II (FTAC).
But from an investing point of view, what differentiates this digital payment company is its USP (unique selling point), as noted by BMO analyst James Fotheringham.
“PSFE is a global leader in iGaming (online betting related to sports, poker, and other casino games, as well as lotteries and bingo),” the 5-star analyst said. “Indeed, 36% of PSFE’s revenues are from global iGaming. That is far more than for any of its peers.”
So, any talk of Paysafe’s growth potential or “consequent equity value,” must factor in the projections for the nascent U.S. iGaming market. This is an industry that is growing at a fast clip, which has only been accelerated by the pandemic. While Fotheringham estimates that last year, the U.S. only accounted for 5% of global iGaming deposit volumes, that is all “about to change,” as more states are coming on board and legalizing iGaming. Fotheringham anticipates that over the next five years, iGaming deposit volumes in the U.S. will grow “at more than five times the rate of growth elsewhere in the world.”
Depending on states’ legislation schedules, the analyst forecasts a 5-year CAGR (compound annual growth rate) of between 40% to 55%. iGaming is already legal and live in 15 states (and D.C.) and 10 additional states could join the fray soon.
With its long history as an iGaming “global market leader,” iGaming services already live in 13 U.S. states and catering to over 30 U.S. iGaming operators – amounting to roughly 75% of the total current U.S. market – and an iGaming digital wallet (Skrill in the U.S.), “attracting sophisticated online gamers,” Paysafe is extremely well-positioned to benefit from the industry’s anticipated growth.
Accordingly, Fotheringham initiated coverage of PSFE stock with an Outperform (i.e., Buy) rating and $15 price target. Investors stand to pocket ~32% gain should the analyst’s thesis play out. (To watch Fotheringham’s track record, click here)
The BMO analyst’s assessment is not unique on Wall Street. In fact, all 7 reviews are to Buy, naturally culminating in a Strong Buy consensus rating. Fotheringham’s share price forecast is relatively tame; going by the $17.29 average price target, shares are expected to gain 54% over the coming months. (See PSFE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The post Paysafe Is Ready to Ride the iGaming Wave; Analyst Says ‘Buy’ appeared first on TipRanks Financial Blog.
Source: TipRanks Blog
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