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On Wednesday, Raymond (NSE:RYMD) James analysts adjusted their stance on Flywire (NASDAQ:FLYW), downgrading the stock from a ’Strong Buy’ to ’Outperform’ and slashing the price target to $17.00 from the previous $29.00. The stock, currently trading at $17.64, has fallen over 26% in the past year, according to InvestingPro data. The downgrade follows Flywire’s fourth-quarter earnings, which fell short of expectations, prompting a reassessment of the stock’s outlook.
The downgrade was primarily driven by Flywire’s fourth-quarter performance, which included a roughly 5% miss on the top line and a disappointing initial guide for 2025. Despite maintaining strong revenue growth of 26.5% over the last twelve months and a healthy current ratio of 2.33, the company’s initial outlook for 10-14% FXN revenue growth in 2025 significantly trailed market expectations, with the midpoint of the guidance at 9% compared to the Street’s 22%. This forecast is expected to lead to a substantial reduction in estimates, with Raymond James projecting a decrease in EBITDA estimates for 2025 and 2026 by 4% and 18%, respectively.
Raymond James noted that the conservative guidance assumes a more than 30% decline in revenue from Canada and Australia, which accounts for approximately 15% of Flywire’s total revenue. This expectation is based on the assumption that there will be no recovery of lost business and is compounded by softer visa issuance trends in the United Kingdom (TADAWUL:4280) and the United States.
Despite the downgrade, Raymond James maintains a positive view on Flywire shares, albeit with less conviction than before. The firm’s analysts believe that the company’s guidance is prudent and conservative, and they highlight Flywire’s valuation, which is now at 12 times Raymond James’ updated 2026 EBITDA estimate despite the expectation of more than 25% mid-term EBITDA growth. InvestingPro analysis suggests the stock is currently undervalued, with a ’GOOD’ overall financial health score. The analysts concluded their commentary by expressing their continued recommendation of the stock, indicating a belief that the current price could offer a favorable entry point for investors. For deeper insights into Flywire’s valuation and growth prospects, including 7 additional ProTips and comprehensive financial metrics, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Flywire Corporation reported its fourth-quarter 2024 earnings, which revealed a notable miss on both earnings per share and revenue forecasts. The company posted an EPS of -$0.12, significantly below the anticipated -$0.002, and revenue of $117.6 million, falling short of the expected $120.26 million. This earnings miss has led to several analyst downgrades. UBS downgraded Flywire from Buy to Neutral, adjusting the price target to $15 from $25, citing the company’s revised fiscal year 2025 revenue growth forecast of 10-14%, which is below the expected 22%.
JPMorgan also revised its price target for Flywire to $16 from $21, maintaining a Neutral rating, after the company’s earnings and guidance for 2025 did not meet expectations. Deutsche Bank (ETR:DBKGn) followed suit, moving its recommendation from Buy to Hold and lowering the price target to $16 from $26, reflecting revised expectations for Flywire’s financial performance. In response to these challenges, Flywire announced a reduction in force of 10% and is undergoing a strategic review of its portfolio to align resources with high-growth potential areas.
Despite these setbacks, Flywire is taking steps to strengthen its position by acquiring Sertifi, a hotel management software company, which is expected to add $35-40 million in revenue for 2025. The acquisition is part of Flywire’s strategy to expand its market presence and capitalize on growth opportunities in the travel segment, which has been a strong performer for the company. These recent developments highlight the challenges and strategic adjustments Flywire is undertaking to navigate the current business environment.
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