BMO Capital has adjusted its outlook on International Money Express (NASDAQ: NASDAQ:IMXI), a leading company in the remittance industry while the firm lowered the price target to $26.00 from the previous $30.00 and maintained an Outperform rating on the stock.
The adjustment follows the company's second-quarter results, which prompted a revision of forward EPS estimates downwards by 6-18%.
The analyst from BMO Capital noted that the retail remittance market, where International Money Express has a significant presence, is experiencing a slowdown.
The downturn is attributed mainly to macroeconomic factors rather than increased competition. The company is facing a decline in retail transaction growth, especially in key corridors.
Despite these challenges, International Money Express is still outperforming in a difficult market. However, the analyst expressed concern that the level of outperformance has lessened compared to historical standards.
The report suggests that the retail remittance market's slowdown is affecting the company's growth trajectory.
International Money Express, also known as Intermex, reported a record-breaking financial performance in the second quarter of 2024. The company's total revenue hit a record $171.5 million, largely driven by significant growth in its digital business. Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) reached $31.1 million, marking an 18.1% margin, while earnings per share (EPS) stood at $0.42 and adjusted EPS at $0.55, reflecting a 10% year-over-year increase.
Intermex also noted the successful integration of La Nacional, which tripled the subsidiary's EBITDA, and the closure of a strategic acquisition in England, enhancing the company's European market presence. Despite these achievements, Intermex anticipates recalibrating its future outlook in response to industry headwinds.
InvestingPro Insights
In light of BMO Capital's revised outlook on International Money Express (NASDAQ:IMXI), recent data from InvestingPro provides additional context to their performance and potential. With a market capitalization of $571.2 million, the company's adjusted P/E ratio stands at an appealing 9.27, reflecting a low valuation relative to near-term earnings growth. This aligns with an InvestingPro Tip highlighting the stock's trade at a low P/E ratio relative to near-term earnings growth, which may attract value-oriented investors.
Despite a challenging quarter, International Money Express has managed to maintain a gross profit margin of 33.88% over the last twelve months as of Q2 2024. This financial stability is further underscored by the company's liquid assets exceeding short-term obligations, a positive sign for investors concerned about the company's immediate financial health.
While the stock has experienced a significant price drop over the last week, with a 21.52% decrease, it's worth noting that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. This InvestingPro Tip may reassure investors of the company's ability to navigate through tough market conditions.
For those interested in deeper analysis, InvestingPro offers additional tips on International Money Express, which can be found at https://www.investing.com/pro/IMXI. These insights could be particularly valuable as the company adjusts its strategies in a slowing retail remittance market.
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