Wells Fargo has adjusted its stance on Flywire (NASDAQ: FLYW), moving from an Overweight rating to an Equal Weight rating, and setting the price target at $18.00.
The revision comes amid concerns over potential ongoing negative news affecting the company's prospects.
The analyst from Wells Fargo pointed to recent developments that could pose risks to Flywire, a provider of payment and receivables solutions.
Specifically, there is apprehension regarding the impact of Canada's new limits on international students for the academic years 2025-2026, along with possible funding reductions in Australia, both of which were not anticipated.
These issues, according to the analyst, could have a secondary effect on demand for Flywire's services. This concern is particularly relevant as the company approaches its third-quarter earnings and looks ahead to 2025.
The potential for these external factors to influence demand has led to the decision to adjust the rating and price target for Flywire.
The new price target of $18.00 reflects a more cautious outlook on the stock's potential performance. The change in rating to Equal Weight suggests that the analyst now views Flywire's shares as more aligned with market performance expectations, rather than outperforming them as previously thought.
In other recent news, Flywire Corporation reported robust financial results for the second quarter of 2024, with a 26% year-on-year increase in revenue, excluding ancillary services, to $99.9 million. The adjusted gross profit mirrored this growth, reaching $63.4 million, and adjusted EBITDA rose by $5.9 million year-over-year to $5.8 million.
These developments include the acquisition of Invoiced, a SaaS platform for B2B accounts receivable, and the initiation of a $150 million share buyback program. Despite challenges in the Canadian market, Flywire exceeded its adjusted EBITDA guidance and increased its full-year adjusted EBITDA margin expectations.
Seaport Global Securities maintained a Buy rating on Flywire, with a steady price target of $26.00, and presented various potential revenue and EBITDA outcomes for the company's outlook for 2025. The analysis includes a Base Case, Bear Case, and Bull Case, each exploring different revenue and EBITDA possibilities.
Seaport Global Securities highlighted the importance of Flywire's operations in Canada and the company's robust growth outside of Canada, which form the majority of Flywire's overall revenue.
InvestingPro Insights
To complement Wells Fargo's analysis of Flywire (NASDAQ:FLYW), recent data from InvestingPro offers additional context. Despite the challenges highlighted by the analyst, InvestingPro Tips indicate that Flywire's net income is expected to grow this year, and analysts predict the company will be profitable. This positive outlook contrasts with the current financial situation, as Flywire was not profitable over the last twelve months.
The company's financial health shows some resilience, with liquid assets exceeding short-term obligations. However, reflecting the concerns raised by Wells Fargo, Flywire's stock has taken a significant hit over the last six months, with InvestingPro data showing a -27.42% price total return during this period.
Flywire's revenue growth remains strong, with a 27.09% increase over the last twelve months as of Q2 2024, reaching $441.65 million. The company also maintains a healthy gross profit margin of 63.49%. These figures suggest that despite external pressures, Flywire's core business continues to perform well.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Flywire, providing a deeper understanding of the company's financial position and market performance.
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