Adhir Kadve of Eight Capital continues to pound the pavement for Payfare (Payfare Stock Quote, Chart, News, Analysts, Financials TSX:PAY), maintaining a “Buy” rating and $17/share target price for a projected return of 166 per cent in an update to clients on Friday. Toronto-based Payfare is a financial technology company that provides instant payment and digital banking solutions for gig economy workers in Canada, the United States and Mexico. Kadve’s latest analysis comes after Payfare provided its fourth quarter and full 2021 financial results, with the analyst saying that last year was impressive while 2022 is looking even better. “Payfare continues to execute on user growth with ongoing rollout of the DasherDirect program, which was enhanced by the addition of the Instant Pay option and was the driver of strong user growth in the quarter,” Kadve said. “While the macro backdrop is somewhat challenging, due to higher fuel prices, Payfare and its customers have introduced key incentives to help drivers and dashers mitigate the increased expense, thereby keeping them on the road.” Payfare’s financial quarter was headlined by $17.3 million in revenue, which came in ahead of the consensus projection of $13.9 million and the Eight Capital estimate of $16 million, while also producing 36 per cent sequential growth and a 401 per cent year-over-year increase. The company also reported an increase in user additions this quarter with 152,000 users added and 512,000 users on the platform, driven by the rollout of the Instant Pay option for the DasherDirect program in mid-November. Payfare’s Q4 adjusted EBITDA was a $2.4 million loss missed in comparison to the Eight Capital projection of a $1.4 million loss and the consensus call of a $2.6 million loss. Meanwhile, Payfare’s gross profit increased 43 per cent sequentially and 177 per cent year-over-year, coming in at $900,000 for a five per cent gross margin. “Last year was truly transformational for Payfare. We went public while staying singularly focused on our mission — empowering financial health for the gig and contract workers we support,” said Marco Margiotta, Payfare CEO and Founding Partner in the company’s March 23 press release. “Not only did we end the year with a record milestone of more than half a million active users but we also worked hard to integrate new features that made our digital banking solution more impactful than ever for those users. We look forward to continuing this momentum into 2022, as we focus on further extending financial empowerment for workers across the entire gig economy and contract workforce.” Looking ahead, Kadve’s next focus for Payfare will be on its Investor Day on April 6, where he expects more details to come out in regards to Payfare’s PAID app, which should be bolstered by today’s news of Payfare adding Visa Direct to its list of real-time payment capabilities. “Recall the PAID app will be a key product initiative for Payfare which will expand the company's TAM beyond its large Gig platform customers to the broader Gig economy workforce,” Kadve said. With the first quarter confirmed and new management guidance in place, Kadve has revised some of his financial projections for the company, as he lowered his revenue forecast for 2022 from $109.8 million to $98 million for projected year-over-year growth of 124 per cent. Looking ahead to 2023, Kadve forecasts revenue moving into nine digits at $148.3 million for a potential year-over-year increase of 51 per cent. From a valuation perspective, Kadve forecasts the company’s EV/Revenue multiple to drop from 6.1x in 2021 to a projected 2.7x in 2022, then to a projected 1.8x in 2023. Meanwhile, on account of lower growth investments being made, Kadve has also revised his adjusted EBITDA forecast, shifting from a $700,000 gain to a $9.2 million loss in 2022 while setting a $400,000 loss projection in 2023. Kadve also revised his gross profit projection, lowering his 2022 target from $14.6 million to $13.7 million for an implied gross margin of 14 per cent, while his 2023 forecast is set at $29.7 million for an implied gross margin of 20 per cent. Kadve’s maintained rating is also rooted in the fact that Payfare is trading at a discounted rate of 1.8x its 2023 EV/Sales in contrast to the peer group average of 7x, this coming despite having much higher growth rates. “We think execution on organic user growth via penetration of existing platforms and recovery in rideshare volumes will likely warrant multiple expansion for Payfare moving forward,” Kadve said. Investors have seen Payfare’s stock price increase by 17.5 per cent over the last 12 months, while those who invested at the start of 2022 have experienced a 22 per cent loss. After hitting a 52-week high of $13.43/share on July 14, the stock has been gradually dropping since, hitting a 52-week low of $4.92/share on March 15.