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Investing.com - Citi maintained its buy rating and $67.00 price target on Bill.com Holdings Inc. (NYSE:BILL) on Wednesday following Xero’s acquisition of Melio for $2.5 billion plus $0.5 billion in contingent consideration. According to InvestingPro data, Bill.com maintains a GOOD financial health score, with the stock currently trading at $45.73, suggesting potential upside to Citi’s target.
The research firm highlighted that the acquisition underscores the scarcity value of SMB B2B payments and commerce solutions, potentially increasing focus on Bill.com as an acquisition candidate. Bill.com remains a dominant player in this space despite the transaction.
While the Bill.com-Xero partnership may be de-emphasized going forward, Citi believes Bill.com may continue serving larger SMBs, noting that Melio’s transaction volume per customer averages approximately 22% of Bill.com’s accounts payable/accounts receivable average.
Citi pointed to the significant valuation differential between the companies, with Melio valued at approximately 13 times annualized revenue versus Bill.com’s 3 times multiple. Bill.com generates $317 million in trailing twelve-month free cash flow compared to Melio’s negative $91 million.
The firm stated that while Xero’s acquisition makes strategic sense to drive U.S. accounting software distribution, it does not significantly alter the competitive landscape in B2B payments and commerce, which Citi does not view as a winner-take-all market.
In other recent news, Bill.com Holdings Inc. announced the appointment of Rohini Jain as its new Chief Financial Officer, effective July 7. This leadership change is part of the company’s strategy to enhance growth and strengthen its market position. Meanwhile, the company’s recent third fiscal quarter report prompted Evercore ISI to lower its price target for Bill.com from $65 to $50, citing mixed results and cautious guidance for the fourth quarter. The firm noted the impact of broader economic conditions on the company’s small and medium-sized business customer base.
Morgan Stanley (NYSE:MS) also downgraded Bill.com from an Overweight to Equalweight rating, adjusting the price target from $60 to $55, while maintaining a positive long-term outlook on the company’s potential. In contrast, BMO Capital Markets raised its price target from $47 to $52, acknowledging potential growth catalysts like enhanced ACH transactions. Keefe, Bruyette & Woods maintained a Market Perform rating with a $54 price target amid the CFO transition, expressing optimism about the strategic direction. These developments reflect varying analyst perspectives on Bill.com’s near-term challenges and growth prospects.
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