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On Tuesday, KeyBanc Capital Markets adjusted its outlook on Bill.com Holdings Inc. (NYSE: NYSE:BILL), reducing the price target from $85.00 to $70.00, while still affirming an Overweight rating on the stock. The revision reflects a cautious stance on small and medium-sized business (SMB) spending, as well as a broader contraction in peer group valuation multiples. The stock, which has declined 45% year-to-date according to InvestingPro data, currently trades near $46.25, suggesting potential upside to KeyBanc’s target.
Analysts at KeyBanc highlighted the company’s robust back-office systems and the prioritization of expense and cash flow management as key strengths. The company maintains impressive gross profit margins of 85% and holds a "GOOD" overall financial health score on InvestingPro. Despite these positive factors, concerns were raised regarding the consumption-based business model of Bill.com, which could be impacted by ongoing downward pressure on operating costs as reported by industry respondents.
The research firm’s decision to lower the price target is also influenced by findings from their survey on SMB IT spending in the first half of 2025. The survey suggests a softer spending outlook among SMBs, which has prompted a more conservative revenue multiple applied to Bill.com. Despite near-term headwinds, 19 analysts have revised their earnings estimates upward for the upcoming period, with consensus targets ranging from $57 to $120 per share.
Bill.com, which provides automated, cloud-based solutions for accounts payable and receivable, along with expense management, still has significant growth opportunities. The survey revealed a high reliance on traditional tools like Excel and Google (NASDAQ:GOOGL) Sheets, with 83% of respondents using these applications for expense management, indicating a large potential market for Bill.com’s services.
The new price target of $70.00 is based on a 5.4 times calendar year 2025 enterprise value to revenue (EV/R) multiple. This is a reduction from the previous multiple, aligning with the contraction observed among peer companies. Currently, Bill.com’s stock is trading at approximately 3.0 times its calendar year 2025 revenue, compared to the peer group’s average near 5.5 times next twelve months EV/R.
In other recent news, Bill.com Holdings Inc. reported its second-quarter fiscal year 2025 earnings, revealing a revenue result that slightly exceeded Wall Street expectations. Despite this, the company faced challenges with a decline in the accounts receivable/accounts payable take rate, attributed to international payment foreign exchange headwinds and seasonal payment mix shifts. Needham maintained its Buy rating and a $100 price target, highlighting the temporary nature of these headwinds and the company’s stable customer growth and total payment volume. Conversely, BMO Capital Markets cut its price target to $78, citing the smallest revenue beat since Bill.com’s IPO and expressing caution due to ongoing uncertainties in monetization improvements.
KeyBanc Capital Markets also adjusted its outlook, reducing the price target to $85 while retaining an Overweight rating, acknowledging positive developments but noting the need for recalibrated expectations due to take rate declines. Additionally, Keefe, Bruyette & Woods lowered their price target to $77, maintaining a Market Perform rating, and noted the company’s strategic investments and growth in international markets despite macroeconomic uncertainties. Analysts from Needham remain optimistic, pointing out that planned new investments could enhance Bill.com’s growth visibility in the latter half of the year.
Overall, the recent analyst updates reflect a cautious yet optimistic view of Bill.com’s ability to navigate current challenges and capitalize on growth opportunities.
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