On Tuesday, Citi adjusted its price target on shares of Nuvei Corp. (NASDAQ:NVEI), a global payment technology company, increasing it to $34 from the previous $27, while maintaining a Neutral rating on the stock. This adjustment follows the recent announcement that Nuvei has entered into an agreement to be acquired by Advent International, a private equity firm.
The company had previously disclosed in mid-March that it was exploring potential merger and acquisition interest. This news had already positively impacted Nuvei's stock price, and the confirmation of the acquisition agreement led to a further, albeit modest, rise in its value. The deal represents a 48% premium over Nuvei's trailing 90-day volume-weighted average price.
The performance of many financial technology (FinTech) stocks has been lackluster since their public offerings in 2020-21. Despite outperforming growth expectations set during their IPOs, these companies have often seen their stock prices fall below their initial offering prices.
This trend has led to some frustration among management and board members within the sector. Still, Nuvei initially exceeded its IPO growth expectations before experiencing post-merger and acquisition disappointments.
Citi's revised Neutral rating, formerly Neutral/High Risk, takes into account the high probability of the acquisition deal being completed, which outweighs previous concerns about the company's business mix and execution. The new stock price target of $34 reflects the terms of the acquisition deal, indicating Citi's expectation that the transaction will likely proceed successfully.
InvestingPro Insights
As Nuvei Corp. (NASDAQ:NVEI) navigates through its acquisition process, real-time data from InvestingPro provides a deeper look into the company's financial health and market position. The company's market capitalization stands at a robust $4.52 billion, indicating a significant presence in the payment technology sector.
Despite a challenging period, Nuvei reported a substantial revenue growth of 41.1% over the last twelve months as of Q4 2023, with a gross profit margin impressively high at 81.27%, reflecting the company's ability to maintain profitability in its core operations.
Investors should note the high price volatility that Nuvei's stock generally trades with, which could be a point of consideration for those with a lower risk tolerance. Still, the company has shown a strong return over the last month and three months, with price total returns of 23.15% and 31.82%, respectively. This suggests a positive investor sentiment in the short term, potentially buoyed by the acquisition news.
For those looking to delve deeper into Nuvei's prospects, InvestingPro offers additional insights. There are more InvestingPro Tips available, including the expectation of net income growth this year and analyst predictions of profitability for the company. Interested readers can find further analysis and tips by visiting https://www.investing.com/pro/NVEI. To enhance your InvestingPro experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 additional InvestingPro Tips listed, users will have ample information to make informed investment decisions.
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