BMO initiates coverage of fintech sector, Mogo named an “Outperform” stock

In a sector report issued last week and reported in Seeking Alpha and other sources, BMO Capital Markets initiated coverage of a number of fintech issuers, with a focus on payment names. Among the companies listed as Outperform stocks are Visa, Mastercard, PayPal, Fidelity National Services, Global Payments, Total System, and Mogo Financial, with potential upsides ranging from 17% to 55%.

TSX-listed Mogo (Mogo Stock Quote, Chart, News: TSX:MOGO) is the only Canadian company covered in the report. The bank has a 12-month target price of $3.00 on the stock, implying a return of 55%.

The BMO report follows on a November report from M Partners analyst Steven Salz, who reiterated his own “Buy” rating and $3.00 target on Mogo.

Salz noted that Mogo’s first EBITDA positive quarter, its Q3 issued in mid-November, was an upside surprise to him.

“Steady top line growth, combined with ~$1M in marketing savings from the Postmedia partnership enabled Mogo to achieve its first EBITDA positive quarter in company history,” said Salz. “We note that this accomplishment is not significant for a traditional lender; however it marks a step towards becoming net income positive with the launch of the upcoming fee-based products, as well as in a downside case from shifting to a pure lender.”

At press time, shares of Mogo were up 4.3 per cent to $2.40.

Disclosure: Mogo is an annual sponsor of Cantech Letter.