On Thursday, Euronet Worldwide (NASDAQ:EEFT) saw its price target adjusted by Needham, dropping to $120 from $125, while the firm sustained its Buy rating on the stock. The adjustment follows Euronet's third-quarter results, which presented a mix of outcomes. While the company's revenue exceeded expectations, driven by its ePay and money transfer segments, earnings before interest, taxes, depreciation, and amortization (EBITDA) margins and earnings per share (EPS) were slightly below projections.
Despite the mixed results, Euronet's management reaffirmed the full-year 2024 EPS guidance, indicating that growth could reach the higher end of their target range. The company also set a preliminary EPS growth target of 10-15% for the fiscal year 2025. Needham views these projections as a solid starting point, especially considering the current economic uncertainties.
The firm acknowledges the possibility of Euronet surpassing the projected EPS growth levels but considers the current forecast to be a prudent estimate. Needham's rationale for maintaining the Buy rating is based on the stock's attractive valuation. Euronet's shares are currently trading at a forward price-to-earnings (P/E) ratio of approximately 10 times for fiscal year 2025, which is considered inexpensive compared to its peers in the payments industry.
In light of the broader economic context, Needham has slightly reduced the target price for Euronet's shares to $120, reflecting ongoing economic uncertainties. Nevertheless, the firm remains positive about the stock's potential, deeming the risk-reward proposition as compelling for investors.
In other recent news, Euronet Worldwide has been the subject of several analyst ratings. DA Davidson reaffirmed its Buy rating on the company, adjusting its price target to $136.00 from an earlier figure. The analyst firm anticipates a strong year-end performance for Euronet, primarily driven by promotional programs in the company's Prepaid (epay) segment. The current forecast predicts a 10-15% year-over-year growth, which equates to an adjusted EPS range of $8.21 to $8.58.
Euronet's recent financial performance has been impressive, with the second quarter of 2024 seeing revenues of $986 million, an adjusted operating income of $134 million, and adjusted EBITDA of $178 million. The company also reported an adjusted EPS of $2.25 for the same period. This robust performance is attributed to growth in the EFT segment, steady progress in the epay and money transfer segments, and the repurchase of $114 million worth of shares.
Recent developments also include Euronet's acquisition of the MEPS ATM network from Payments Network Malaysia Sdn Bhd, making it the largest non-bank ATM operator in Malaysia. The company also added Sergi Herrero, a veteran in the payment and technology sectors, to its board. Citi and Wolfe Research also offered their ratings, with Citi maintaining its Buy rating and a steady price target of $135.00, and Wolfe Research upgrading Euronet's stock rating from Underperform to Peer Perform.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Needham's analysis of Euronet Worldwide (NASDAQ:EEFT). As of the last twelve months ending Q2 2024, Euronet reported a revenue of $3.8 billion, with a solid revenue growth of 7.99%. The company's P/E ratio stands at 16.1, which is slightly higher than the forward P/E of 10 times for fiscal year 2025 mentioned in the article, suggesting potential for value realization.
InvestingPro Tips highlight that management has been aggressively buying back shares, which could be seen as a sign of confidence in the company's future prospects. This aligns with the positive outlook on EPS growth mentioned in the article. Additionally, analysts predict that the company will be profitable this year, supporting Needham's view on the stock's potential.
It's worth noting that InvestingPro offers 6 additional tips for Euronet Worldwide, providing investors with a more comprehensive analysis of the stock. For those seeking a deeper dive into EEFT's financial health and market position, exploring these additional insights on InvestingPro could be valuable.
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