On Thursday, Citi reaffirmed its Neutral rating on Edenred (EPA:EDEN:FP) (OTC: EDNMY), with a price target of EUR32.00. The firm's analysis indicates potential mid-term growth for the company, driven by increased adoption, especially among small and medium-sized enterprises (SMEs) in France and Italy, which currently represent about 5-10% of Edenred's market. Additionally, the firm anticipates growth from face value increases, which are expected in 52% of markets in 2023 compared to 43% in 2022.
The analyst noted a deceleration in the pace of growth compared to previous years and pointed to softer trends in the fourth quarter, suggesting another weak quarter as detailed in the "FinTech Findings" report.
Despite Edenred's valuation being lower than historical averages, Citi suggests that regulatory concerns and fee-related issues could continue to impact investor sentiment until the end of 2025. At that time, more information on the company's mid-term growth and margin outlook is anticipated to be revealed at a Corporate Management Day (CMD).
Citi's stance remains unchanged as it advises investors to retain a Neutral position on Edenred shares. The firm's analysis suggests that while there is growth potential, external factors such as regulation and fee concerns may weigh on the stock's performance in the near term. Edenred, known for its prepaid corporate services, has been a player in the market that has seen varying levels of growth in different regions and sectors.
Investors are advised to look forward to the end of 2025 for further clarity on Edenred's mid-term growth and margin projections. This future outlook is expected to be a significant factor in shaping investor expectations and the company's stock valuation.
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