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On Monday, JPMorgan analyst Tien-tsin Huang changed the investment firm’s stance on Marqeta Inc. (NASDAQ:MQ), upgrading the stock rating from Neutral to Overweight and increasing the price target from $5.00 to $6.00. The stock, currently trading at $5.04, has shown strong momentum with a 29.23% gain over the past six months. The upgrade reflects Huang’s growing confidence in the company’s prospects, citing several developments that have occurred since the previous downgrade in March 2023.Want deeper insights? InvestingPro offers exclusive analysis and 13 additional investment tips for Marqeta, helping you make more informed decisions.
Marqeta has successfully navigated through a series of challenges, including the renewal of contracts with its largest customer, Block, and overcoming regulatory hurdles that had previously slowed growth projections for 2024-25. According to InvestingPro data, the company maintains a strong financial position with a current ratio of 3.18, indicating ample liquidity to meet short-term obligations. Additionally, the company has undergone management changes. Despite these issues not being completely resolved, Huang expressed "reasonable enough confidence into their outcome to turn more constructive."
The analyst highlighted Marqeta’s progress in diversifying its revenue sources. The company has reduced its reliance on Block, which previously accounted for 71% of its revenue at the time of JPMorgan’s downgrade last year, to 45%. This shift has been significant, as non-Block Total (EPA:TTEF) Payment Volume (TPV) has been growing twice as fast as Block’s TPV.
Huang’s optimism is also supported by Marqeta’s strategic value as a provider of card revenue for non-bank entities. The reduced dependence on a single customer, along with positive sentiments expressed by Block to accelerate growth, were noted as key factors in the upgraded outlook. The company’s overall financial health score is rated as GOOD by InvestingPro, with revenue expected to grow by 15% in the current fiscal year.
In conclusion, JPMorgan’s new price target of $6.00 for Marqeta is based on the company’s attractive valuation at 4 times the next twelve months’ gross profit. This valuation compares favorably with peers, which trade between 3 to 14 times, with an average of 9 times gross profit. The company currently trades at a P/E ratio of 45.73, with a gross profit margin of 69.37%. The upgraded rating and raised price target suggest JPMorgan sees a more promising future for Marqeta’s stock performance.Discover comprehensive analysis and valuation metrics in Marqeta’s Pro Research Report, available exclusively on InvestingPro, along with 1,400+ other detailed company reports.
In other recent news, Marqeta Inc. reported impressive financial results for the first quarter of 2025, exceeding analysts’ expectations. The company posted an earnings per share of -$0.02, outperforming the anticipated -$0.05. Revenue reached $139 million, surpassing the forecasted $136.12 million. Marqeta’s total processing volume rose to $84 billion, marking a 27% year-over-year increase. The company also reported a gross profit of $99 million, maintaining a gross margin of 71%.
Additionally, Marqeta is expanding its presence in Europe and focusing on AI innovations. The acquisition of TransactPay is on track to close by the end of the third quarter, which is expected to enhance its program management offerings in Europe. Marqeta’s guidance for 2025 includes projected net revenue growth of 13-15% and gross profit growth of 14-16%, with an emphasis on platform capabilities and innovation. The company remains focused on reducing its dependency on Block, which currently accounts for 45% of its net revenue.
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