Benchmark cuts Repay stock price target to $8 from $12, keeps Buy rating

On Monday, Benchmark analysts adjusted their outlook on Repay Holdings Corporation (NASDAQ:RPAY), reducing the price target to $8.00 from the previous $12.00, while still maintaining a Buy rating on the stock. Currently trading at $3.96, significantly below its 52-week high of $11.27, the stock has caught the attention of value investors. The analysts pointed out that the market’s view of Repay’s financial health has been skewed by a common misconception regarding the company’s involvement with credit risk. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 2.69.

According to Benchmark, Repay’s performance has been unfairly judged due to the belief that the company holds direct credit exposure. However, the firm clarified that Repay’s actual exposure is indirect and volume-based, linked to U.S. consumer credit segments like personal and auto loans. This distinction is critical as it influences the perceived risk associated with investing in Repay’s shares. The company has demonstrated solid operational performance with a 77.12% gross profit margin and 5.53% revenue growth over the last twelve months.

The analysts also highlighted Repay’s business strategy, emphasizing the company’s focus on deepening relationships with its existing client base. This approach is seen as a strategic advantage that could mitigate the effects of any potential downturns in the markets it operates within.

Benchmark’s commentary shed light on the company’s resilience, suggesting that Repay’s emphasis on growing consumer payments through existing clients could provide a cushion against industry-wide headwinds. This perspective offers a more nuanced understanding of the company’s position and potential for growth, despite the lowered price target.

The new price target of $8.00 reflects a revised expectation of Repay’s future stock performance. Despite this adjustment, the continued Buy rating indicates that Benchmark’s analysts still see value in the company’s stock and believe in its long-term prospects.

In other recent news, Repay Holdings Corporation announced that its Chief Financial Officer, Tim Murphy, will step down in May 2025. Murphy has been instrumental in the company’s growth and transition to a public entity. In financial developments, Repay’s fourth-quarter revenue figures came in slightly below expectations, attributed to the loss of three clients, while adjusted EBITDA exceeded forecasts by 1%. This led to a reduction in the company’s stock price target to $12 by DA Davidson and Benchmark, both of which maintained a Buy rating. Canaccord Genuity also adjusted its price target to $12, citing Repay’s strong financial metrics but acknowledging challenges in top-line growth due to decreased political media advertising and customer losses.

Repay has initiated a strategic review of its operations, potentially exploring options like restructuring or privatization to enhance shareholder value, as announced by CEO John Morris. Additionally, the company has set executive bonus targets for 2025, with 75% based on achieving specific financial performance goals, primarily Adjusted EBITDA. These developments reflect Repay’s proactive measures to address market conditions and align executive incentives with financial success. Investors are closely monitoring these strategic initiatives and financial outcomes as Repay navigates its current challenges.

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