On Tuesday, Monness Crespi Hardt initiated coverage on Marqeta Inc. (NASDAQ:MQ) stock, assigning a Buy rating to the stock along with a price target of $7.50.
The firm highlighted Marqeta's role in pioneering the modern card issuer processor era, transitioning from serving Fintechs with specific solutions to tackling the broader embedded finance market with a solutions-oriented approach.
Marqeta has been recognized for supporting innovative payment solutions such as on-demand delivery, point-of-sale lending, expense management, and accelerated wage access. The company aims to expand its reach by delivering its products to a wider range of industries and cross-selling to existing clients.
Monness Crespi Hardt anticipates that the diverse factors influencing Marqeta's growth since 2022 are less likely to repeat in the upcoming four to five years due to its expanded product offerings, decreased revenue dependency on Block (SQ), and a growing customer base.
The firm's analysis suggests that Marqeta's strategic pivot towards embedded finance, with its comprehensive coverage across carded tender types and innovative use cases, is timely and aligns with increasing consumer engagement.
Additionally, the potential for growth through cross-selling to existing clients and moving upmarket is seen as a positive trajectory for the company. Marqeta's size and features also position it as an attractive acquisition target for larger issuer processors or financial buyers looking to modernize.
In the near term, Monness Crespi Hardt views the flexibility in operating leverage and a return to over 20% gross profit growth as crucial for Marqeta. Over the longer term, the firm believes that the structural margins of the business should be examined, especially as the company's EBITDA margin target suggests comparable gross profit economics on embedded finance, despite the prospects for significantly better net revenue take rates.
InvestingPro Insights
As Monness Crespi Hardt sheds a positive light on Marqeta's future, real-time metrics from InvestingPro paint a detailed picture of the company's financial health. The market capitalization of Marqeta stands at $2.93 billion, indicating a significant presence in the industry. Despite the challenges, Marqeta's gross profit margin remains robust at 48.73% for the last twelve months as of Q4 2023, showcasing its ability to maintain profitability in core operations.
However, the road ahead may not be without its bumps. Analysts tracked by InvestingPro do not expect Marqeta to be profitable this year, with a P/E ratio of -13.72 reflecting these concerns. Moreover, the company's revenue has seen a decline of 9.63% over the same period, and the stock price has experienced considerable volatility, with a 16.15% drop over the last three months. These InvestingPro Tips highlight the need for potential investors to consider both the opportunities and risks associated with Marqeta.
For investors looking for more comprehensive analysis and additional InvestingPro Tips, there are currently 8 more tips available at https://www.investing.com/pro/MQ. These insights can be further enriched by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a more strategic approach to investment decisions in Marqeta.
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