On Tuesday, Wells Fargo upgraded shares of Marqeta Inc. (NASDAQ: MQ) from Equal Weight to Overweight while maintaining a price target of $7.00. The firm sees a strong potential for the company, highlighting its leadership in modern card issuing and approximately $1 billion in balance sheet cash as key factors for the positive outlook.
Marqeta, known for its card issuing platform, is recognized by Wells Fargo for its emerging opportunities and continuous innovation, particularly within the Square/Cash App ecosystem. The firm notes that despite the unchanged price target, the current lower share price presents an attractive entry point for investors.
The upgrade is based on a valuation of 6 times the company's projected 2025 gross profits of $443 million, which translates to 49 times the estimated 2025 EBITDA and 26 times the projected 2026 EBITDA. Wells Fargo believes that the financials of Marqeta are becoming clearer, which supports the case for a market re-rating.
The analyst from Wells Fargo emphasized that Marqeta's position and the recent share price dip make a strong case for the stock's upside. The company's significant cash reserves and its role in the payment technology sector contribute to the optimism around its future performance.
In other recent news, Marqeta Inc. has been the subject of attention from financial analysts following its robust financial performance for the first quarter of 2024. The company's key financial metrics, including net revenue, gross profit, and adjusted EBITDA, exceeded market expectations, with a notable 33% year-over-year increase in total processing volume (TPV) reaching $67 billion. Additionally, Marqeta introduced a share repurchase program of up to $200 million.
Goldman Sachs initiated coverage on Marqeta, assigning a Neutral rating and setting a price target of $5.50. The firm acknowledged Marqeta's significant role in the success of Block Inc.'s Cash App card and expressed optimism about the company's potential growth driven by commercial initiatives, such as early wage access programs and a partnership with Walmart (NYSE:WMT).
However, Goldman Sachs also highlighted challenges in the consumer fintech space, including a highly concentrated U.S. market and Marqeta's reliance on international market penetration and its business relationship with Block.
Concurrently, Citi reaffirmed its Buy rating on Marqeta shares, maintaining a steady price target of $8.00. This decision was influenced by Marqeta's financial strategies, including share repurchases and stock-based compensation plans. Citi's assessment was based on Marqeta's first-quarter earnings and related financial disclosures.
InvestingPro Insights
Following the Wells Fargo upgrade, a closer look at Marqeta through the lens of InvestingPro data and tips provides additional context for investors considering the stock. Marqeta's market capitalization stands at a solid $2.75 billion, reflecting its position in the payment technology market. Despite an aggressive share buyback program, as noted in one of the InvestingPro Tips, analysts are cautious, expecting a sales decline and no profitability for the current year. This aligns with the company's reported revenue decline of nearly 27.85% over the last twelve months as of Q1 2024.
The company's stock price volatility is also a factor to consider, with a notable 24.07% year-to-date total return decline as of the 177th day of 2024. However, the InvestingPro Fair Value estimate of $5.39 USD suggests that the stock is currently trading close to what is considered its fair value. Additionally, Marqeta's liquid assets are reported to exceed its short-term obligations, which may provide some financial stability despite the challenges ahead.
For investors seeking a more in-depth analysis, there are 6 additional InvestingPro Tips available, which can be accessed through the InvestingPro platform. By using the coupon code PRONEWS24, readers can also get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering further insights to inform investment decisions in the dynamic payment technology sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.