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On Wednesday, H.C. Wainwright reiterated a Buy rating on FlexShopper (NASDAQ:FPAY) shares, maintaining a price target of $2.50, which sits at the lower end of analyst targets ranging up to $4.00. According to InvestingPro analysis, the stock appears undervalued at its current market capitalization of $25.32 million. Analyst Scott Buck highlighted the company’s release of its 4Q24 operating results during Wednesday’s trading session. Despite revenues falling short of expectations, FlexShopper reported an impressive gross margin of 85.44% and reduced operating expenses, leading to better-than-anticipated profitability.
The company’s 4Q24 results, albeit a full quarter old pending auditor finalization, were accompanied by a positive forecast for 2025. With trailing twelve-month revenue of $139.8 million and EBITDA of $35.45 million, FlexShopper provided an ambitious outlook that includes a gross profit range of $90.0 million to $100.0 million and an adjusted EBITDA between $40.0 million and $45.0 million. These figures, particularly at their midpoints, exceed the analyst’s prior estimates of $92.0 million for gross profit and $35.3 million for adjusted EBITDA. InvestingPro data reveals that net income is expected to grow this year, with analysts predicting profitability in 2025.
Buck attributed the improved profitability to enhancements in asset quality, resulting from changes in the underwriting process, and to the realization of operating leverage as the business expands. The company also noted increased efficiency in marketing and general expenses.
Furthermore, the analyst pointed out that FlexShopper’s ongoing rights offering and patent litigation could serve as significant catalysts for the stock in 2025. The rights offering aims to redeem 91.0% of the outstanding Series 2 Preferred Stock, which is expected to be accretive to earnings and simplify the company’s capital structure.
Despite a year-to-date decline of 31.0% in FPAY shares, which is more than double the 14.0% drop in the Russell 2000 index, Buck believes that the 4Q24 performance and the 2025 guidance should foster investor optimism for the coming year and beyond. For deeper insights into FlexShopper’s valuation and growth prospects, InvestingPro subscribers can access 10+ additional ProTips and a comprehensive Pro Research Report, which transforms complex financial data into actionable intelligence.
In other recent news, FlexShopper, Inc. has reported a substantial increase in customer applications and originations for January 2025, with a 130% year-over-year rise in new customer applications. The company also noted a 44% increase in January originations compared to the previous year, achieving the highest January originations in four years. FlexShopper’s B2B partnerships have expanded significantly, with a 248% increase in the number of stores offering their virtual lease-to-own solutions since the end of 2023. Additionally, FlexShopper has set terms for its upcoming Series A, B, and C rights offerings, following a successful unit subscription that raised approximately $12 million. The proceeds, along with the conversion of $2.5 million in subordinated debt, were used to reduce liabilities under the company’s credit agreement with Waterfall Asset Management, LLC. The rights offerings are expected to strengthen the company’s financial stability, with Series A, B, and C rights expiring on February 15, March 17, and April 16, 2025, respectively. CEO Russ Heiser expressed confidence in the accretive nature of these offerings to the company’s financial performance. These developments are part of FlexShopper’s broader strategy to enhance its lease-to-own program and improve its financial position.
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