On Monday, H.C. Wainwright maintained a Buy rating on FlexShopper (NASDAQ:FPAY) shares, with a steady price target of $2.50. The firm recognized the company's third-quarter performance, which saw revenues of $38.6 million, surpassing their estimate of $37.7 million.
The results, which were announced prior to the market opening on Thursday, November 14, 2024, also featured a notable improvement in payment performance and the highest gross margin recorded by H.C. Wainwright since they began tracking the company in 2017.
FlexShopper's provision for doubtful accounts showed a significant 1000 basis points improvement, attributed to enhanced underwriting, elevated customer quality, and better account servicing. This contributed to a gross margin of 58.3%. The company's business-to-business (B2B) segment also displayed considerable growth, with the number of signed stores reaching 7,800, marking a 250% increase since the start of the year.
The company is expected to continue its growth trajectory, with new store locations anticipated to contribute to lease originations in 2025. H.C. Wainwright also highlighted two potential catalysts for FlexShopper in the coming year: a pending rights offering and ongoing patent litigation. The rights offering aims to redeem 91% of Series 2 Preferred Stock at a significant discount, which is expected to be accretive to earnings and simplify the company's capital structure.
FlexShopper's consistent performance is projected to draw investor interest, especially as the stock is currently trading at a discount compared to its larger lease-to-own peers. H.C. Wainwright encourages investors to leverage the current attractive valuation levels to accumulate shares in anticipation of more favorable operating results in 2025, reiterating their Buy rating and $2.50 price target on FPAY shares.
In other recent news, FlexShopper, Inc. reported a substantial increase in revenue and strategic growth. The company's third quarter 2024 earnings call revealed a 23% rise in total revenue, reaching $39 million, and a 45% increase in adjusted EBITDA, amounting to over $12 million.
Net income for common stockholders was $1.2 million, or $0.05 per diluted share. FlexShopper's growth has been driven by an expansion in financing options and retail partnerships, with the number of retail locations using its services now around 7,800.
In addition to these financial results, the company has launched a rights offering aimed at raising capital and reducing debt. This initiative is part of FlexShopper's strategic plans to augment shareholder value.
Looking ahead, the company is optimistic about its growth trajectory and strategic initiatives for 2025 and beyond. The proceeds from the rights offering are planned to be used to reduce its cost of capital and bolster internal growth funding.
These are recent developments that highlight the company's robust financial performance and strategic growth initiatives. Despite potential macroeconomic challenges that could impact growth, FlexShopper has seen significant growth in its B2C segment and secured two major partnerships this year. The company is also planning AI-driven automation for 2025 to further enhance payment performance and servicing capabilities.
InvestingPro Insights
FlexShopper's recent performance and H.C. Wainwright's positive outlook are further supported by real-time data from InvestingPro. The company's revenue growth remains strong, with a 23.81% increase over the last twelve months as of Q2 2024, and an even more impressive 29.46% growth in the most recent quarter. This aligns with the analyst's observations of surpassing revenue estimates and the company's growth trajectory.
InvestingPro Tips highlight FlexShopper's recent market performance, noting significant returns over the last week (22.88%), month (13.73%), and three months (28.32%). These short-term gains reflect the positive sentiment surrounding the company's improved financial results and growth prospects.
However, investors should be aware that FlexShopper is currently not profitable over the last twelve months, with a negative P/E ratio of -6.48. This underscores the importance of the company's ongoing efforts to improve profitability through enhanced underwriting and operational efficiencies.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for FlexShopper, providing a more comprehensive view of the company's financial health and market position.
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