On Monday, UBS initiated coverage on Nayax (NASDAQ:NYAX) stock, a company operating within the payments industry, with a Neutral rating and a price target of $29.00. The firm's analysis suggests that the current stock price reflects the expected revenue growth and margin performance.
Nayax has shown a significant year-to-date increase in stock value, rising approximately 37%. UBS acknowledges Nayax's strong position to continue its growth trajectory in the payments sector.
However, the firm indicates that the risk-reward profile for Nayax shares is balanced, considering the company's current enterprise value-to-gross profit multiple aligns closely with its direct competitor and is at a discount compared to the average of its peer group.
The coverage points out that Nayax trades at an enterprise value/gross profit multiple-to-growth of roughly 0.2x, which is in line with its closest competitor, whereas the peer group average stands at around 0.3x. UBS believes that a discount to the peer group average is justifiable, given Nayax's reliance on nonrecurring hardware revenue, the small size of its public float affecting trading liquidity, and lower profitability metrics, including free cash flow conversion of gross profit.
UBS's forecasts for Nayax's gross profit growth are slightly more optimistic than the consensus, with expectations of a 41% compound annual growth rate (CAGR) from 2023 to 2025, compared to the Street's forecast of approximately 40%. Despite this, the firm sees limited potential for the stock to outperform market expectations, noting that their gross profit estimates are only 1% and 2% higher than the Street's for the years 2024 and 2025, respectively.
InvestingPro Insights
As Nayax (NASDAQ:NYAX) navigates the competitive payments industry landscape, real-time data and analysis from InvestingPro provide additional context to UBS’s coverage. Nayax's market capitalization stands at a robust $911.83 million, reflecting investor confidence in the company's potential. Despite a negative P/E ratio, which currently sits at -53.81, analysts are optimistic about Nayax's future profitability. The company has experienced a remarkable revenue growth of 35.72% over the last twelve months as of Q1 2023, supporting UBS's positive outlook on Nayax’s revenue trajectory.
InvestingPro Tips suggest that Nayax's net income is expected to grow this year, and analysts anticipate sales growth in the current year, reinforcing UBS's forecast for the company's gross profit growth. Notably, Nayax has delivered a high return over the last year, with a 51.63% price total return, showcasing its strong market performance. For investors seeking more in-depth analysis, there are 9 additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/NYAX. Additionally, for those interested in an InvestingPro subscription, use the promo code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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