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On Tuesday, BMO Capital Markets adjusted its outlook on Repay Holdings (NASDAQ:RPAY) Corporation (NASDAQ: RPAY), reducing the price target from the previous $7.00 to $5.00, while sustaining a Market Perform rating on the stock. Trading at $4.18, RPAY has shown recent signs of recovery with an 8.9% gain over the past week, though the stock remains down over 60% year-over-year. The revision comes after the conclusion of the company’s strategic review. According to InvestingPro analysis, the stock currently appears undervalued based on its Fair Value assessment.
Rufus Hone, an analyst at BMO Capital, noted signs of stabilization in Repay’s organic growth following client losses announced previously. The company anticipates an uptick in gross profit (GP) growth, projecting to exit 2025 with high single-digit to low double-digit percentage growth, which is partly attributed to comparatively easier year-over-year comparisons. The company maintains a strong gross profit margin of 77% and a healthy current ratio of 3.71, indicating solid financial stability.
The first quarter results have bolstered BMO Capital’s confidence in Repay’s ability to achieve sustainable growth in the near term. The firm observed a significant acceleration in the Business Payments GP, spurred by the robust performance of core accounts payable, the onboarding of enterprise clients, and initiatives aimed at enhancing payment monetization.
Following the strategic review’s conclusion, BMO Capital has opted to apply a lower target multiple to Repay’s valuation, shifting from 8 times to 6 times. This adjustment underpins the new price target set for Repay’s stock.
Repay Holdings Corporation, which operates in the financial technology sector, offers comprehensive payment processing solutions. The company’s services are designed to facilitate electronic payments for personal and business transactions, enhancing the efficiency and security of the payment ecosystem.
In other recent news, Repay Holdings Corporation reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of negative $0.09, which was significantly below the expected $0.22. The company’s revenue for the quarter was $77.3 million, falling short of the anticipated $83.92 million. This performance underscores the operational challenges Repay is facing, as revenue decreased by 4% year-over-year, and gross profit declined by 5%. Despite these setbacks, Repay’s management remains optimistic about growth acceleration in the latter half of 2025, focusing on enhancing their sales model and payment monetization opportunities.
Additionally, Keefe, Bruyette & Woods revised their price target for Repay Holdings, lowering it from $6.50 to $4.50, while maintaining a Market Perform rating. The firm’s analyst noted that while the recent quarter showed some positive aspects, the strategic review’s outcome, which led to an upgraded share repurchase authorization, was seen as underwhelming. The company continues to face near-term headwinds, including client losses and macroeconomic uncertainties, but management is confident in its long-term growth potential.
Repay Holdings has concluded its strategic review, deciding to invest in organic growth rather than pursuing alternative strategic outcomes. The company has also increased its share repurchase program authorization to $75 million, reflecting its commitment to creating shareholder value. As part of its capital allocation strategy, Repay plans to focus on organic growth investments and maintain a strong balance sheet to address upcoming convertible notes due in 2026.
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