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On Wednesday, Deutsche Bank (ETR:DBKGn) issued a downgrade for Flywire shares, moving its recommendation from "Buy" to "Hold" and significantly reducing the price target to $16.00 from the previous $26.00. Currently trading at $17.64, the stock has declined 14.45% year-to-date, according to InvestingPro data. The adjustment comes after Flywire reported disappointing fourth-quarter revenue, excluding ancillary services, and provided a fiscal year 2025 outlook that fell short of expectations.
The company’s forecast for approximately 12% constant currency growth at the midpoint starkly contrasts with management’s previous projections shared during the third-quarter earnings call and at December public conferences. This represents a significant slowdown from the current revenue growth rate of 26.5% and gross profit margin of 63.61%. At that time, Flywire had indicated potential for low-20s growth and compliance with the Rule of 40—a metric that suggests companies should aim for a combined growth rate and profit margin of at least 40%.
The downward revision in expectations is attributed to underperformance in key markets. Revenue growth in Canada is now anticipated to decline by 30% year-over-year, a significant deviation from earlier predictions of flat growth. Similarly, Australia’s growth is projected to fall below the company average, which also diverges from prior outlooks.
Moreover, the United States has shown signs of weakening, with visa data for the fourth quarter of 2024 and the year-to-date figures for fiscal 2025 indicating a double-digit decline compared to the previous year. Flywire also anticipates a continued slowdown in U.S. education sector growth, which is expected to lag behind the approximately 13% year-over-year growth recorded in fiscal year 2024.
These factors collectively contributed to Deutsche Bank’s decision to downgrade the stock and adjust the price target, reflecting revised expectations for the company’s financial performance in the coming year. Despite trading at a high P/E ratio of 109.38, InvestingPro analysis reveals 7 additional key insights about Flywire’s valuation and growth prospects, available exclusively to subscribers through the comprehensive Pro Research Report.
In other recent news, Flywire Corporation reported its fourth-quarter 2024 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.12, falling short of the anticipated -$0.002, with revenue reaching $117.6 million, below the expected $120.26 million. Despite a 17.4% year-over-year revenue increase, the earnings miss and restructuring announcement overshadowed these gains. Flywire is undergoing restructuring, affecting 10% of its workforce, amid challenges in the Canadian and Australian education markets. The acquisition of Certify and expansion in key markets like India and China are part of Flywire’s strategic growth efforts. Analysts have noted the company’s challenges in the education sector, highlighting the impact of visa policy changes. Flywire anticipates continued growth in EMEA, UK, travel, and B2B segments, despite expecting a 30% revenue decline in the Canadian and Australian education markets due to visa policy challenges.
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