Fintech stock Nuvei keeps Outperform rating with National Bank

Solid quarterly results and strong guidance from management have National Bank Financial analyst Richard Tse staying bullish on Canadian payments platform Nuvei (Nuvei Stock Quote, Charts, News, Analysts, Financials NASDAQ:NVEI). Tse delivered an update to clients on Wednesday where he maintained an “Outperform” rating and a $75.00 target price, which at press time implied a one-year return of 114.5 per cent.

Montreal-based Nuvei, which has payment technology solutions for merchants and partners worldwide, announced on Wednesday its fourth quarter and year end financials. Nuvei reported revenue up four per cent year-over-year to $220.3 million and total transaction volume up 28 per cent to $40.3 billion, with e-commerce representing 91 per cent of that volume. Adjusted EBITDA dropped by six per cent to $85.7 million. (All figures in US dollars.)

For the Q1 2023, management called for $39.5-$41 billion in total transaction volume, $248-$256 million in revenue and $92.5-$96 million in adjusted EBITDA. For the year, the revenue outlook is $1,224-$1,264 million and $455-$477 million.

“We’ve worked diligently to further scale our platform organically and inorganically, diversify the business across high-growth discretionary and non-discretionary verticals, increase our use cases, target more end markets, and increase our distribution; all of which combined substantially expands our TAM to now include global e-commerce, integrated payments and B2B,” said Philip Fayer, Chair and CEO, in a press release.

Tse said the $220.3 million topline compared to his estimate at $217.9 million and the consensus call at $219 million, while adjusted EBITDA at $86 million came in above his $81.5 million estimate but below the Street’s forecast at $88 million.

Tse said the Q4 results as well as management’s guidance suggest continued execution and he expects growth to re-accelerate over the second half of 2023 after an expected continued tough go for its digital assets and cryptocurrency business over the first half of the year.

“Nuvei has made significant investments in expanding its presence in emerging technology and markets — LatAm and APAC are examples of that with revenue in those regions up 107 per cent year-over-year and 90 per cent year-over-year, respectively. To us, it’s that focused approach on growth markets that sets Nuvei apart from peers. In the quarter, Nuvei also expanded its payments methods (603 in total; +17 Q/Q). Beyond that, we like the fact the Company continues to increase its momentum with Enterprise level customers as that validates its underlying IP, in addition to having lower churn (relative to SMBs),” Tse wrote.

Nuvei’s share price is currenty down about 54 per cent over the past 12 months but is up about 48 per cent so far in 2023.