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On Monday, Citi analyst Andrew Schmidt revised the price target for Repay Holdings Corporation (NASDAQ:RPAY) to $4.50, down from the previous $8.00, while retaining a Neutral rating on the stock. The adjustment follows Repay’s first quarter performance in 2025, which met expectations despite the negative effects of client losses. With analyst targets ranging from $4.50 to $12.00, the stock has shown significant volatility, having declined nearly 60% over the past year. The Consumer Payments division’s gross profit aligned with Citi’s projections, and the Business Payments sector slightly exceeded them.[Get deeper insights into RPAY’s volatility patterns and 12+ additional key metrics with InvestingPro]
Repay has recently shared certain elements of its future outlook, a move they had not made previously. The company anticipates a sequential quarterly increase in normalized gross profit growth, projecting high-single to low-double digit growth for the fourth quarter of 2025. With current revenue of $309.65M and a strong gross profit margin of 77%, InvestingPro analysis suggests the stock is currently undervalued. Additionally, Repay expects a free cash flow (FCF) conversion rate exceeding 60% by the end of the fourth quarter.
The conclusion of Repay’s strategic review process has also been announced. Schmidt’s revised estimates are primarily based on a forecast of reduced growth in Consumer Payments for the fiscal year 2025, which takes into account the effects of client losses over the year. Consequently, the lowered target price reflects both the decreased growth estimates and a reduced target multiple compared to peers, based on the current growth rate.
Schmidt also shifted the stock’s rating to Neutral/High Risk from its previous Neutral status. This change reflects the ongoing efforts to enhance growth and cash flow, as well as the stock’s current volatility levels. Despite the challenges, Repay maintains strong liquidity with a current ratio of 3.71, and management has been actively buying back shares. Repay’s management is actively working to address the challenges faced and improve the company’s financial performance moving forward.[Access the complete RPAY Pro Research Report and discover 10+ additional ProTips with InvestingPro]
In other recent news, Repay Holdings Corporation reported its first-quarter 2025 earnings, revealing a challenging period with an earnings per share (EPS) of negative $0.09, significantly below the forecasted $0.22. Revenue for the quarter was $77.3 million, falling short of the expected $83.92 million, marking a 4% year-over-year decline. Despite these results, the company exceeded Wall Street’s expectations in gross profit growth, particularly in its Business Payments segment, which saw a 12% increase year-over-year. Following the conclusion of its strategic review, Repay has announced plans to focus on organic growth, particularly in the Enterprise direct sales channel.
Analysts have reacted to these developments with varied adjustments to their outlooks on Repay. DA Davidson reaffirmed a Buy rating with a $12.00 price target, citing the company’s strong performance and promising guidance for 2025. Conversely, UBS and Keefe, Bruyette & Woods both reduced their price targets to $4.50, maintaining Neutral and Market Perform ratings, respectively, reflecting cautious optimism about the company’s growth strategies. BMO Capital Markets also adjusted its target to $5.00, sustaining a Market Perform rating, while noting signs of stabilization in Repay’s organic growth.
Repay’s management remains optimistic about the future, projecting sequential quarterly normalized gross profit growth and a high single-digit to low double-digit growth rate by the fourth quarter of 2025. The company has also increased its share repurchase authorization to $75 million, indicating confidence in its long-term intrinsic value. As Repay navigates these challenges, its strategic initiatives and investments in organic growth are anticipated to enhance its financial trajectory in the latter half of the year.
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