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On Monday, Keefe, Bruyette & Woods maintained their Market Perform rating and $4.50 price target on Marqeta Inc. (NASDAQ: NASDAQ:MQ) shares, despite a short report from J Capital alleging potential significant business loss due to an FBI investigation into the company’s issuing bank, Sutton Bank. The report suggested that Marqeta could face a 70% loss of business if the investigation into Sutton Bank’s anti-money laundering (AML) practices led to outcomes similar to other fintechs and banks previously investigated for non-compliance. However, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 3.18, indicating ample liquidity to meet short-term obligations.
Keefe, Bruyette & Woods expressed skepticism regarding the allegations in the short report, which was released earlier on Monday. According to the firm, the report lacked convincing evidence of a "smoking gun" that would suggest an imminent threat to Marqeta’s business. The analyst from Keefe, Bruyette & Woods, Sanjay Sakhrani, noted that while the report compiled various facts that could be interpreted as a strong bearish argument against Marqeta, much of the information was already known and factored into their current assessment of the company.
The analysis by Keefe, Bruyette & Woods highlighted that Marqeta is already facing challenges, including risks associated with business concentration and the broader macroeconomic and regulatory environment. These challenges have been a contributing factor to the stock’s underperformance, reinforcing the firm’s decision to maintain a Market Perform rating.
Sakhrani’s review of the short report concluded that it did not present new, significant information that would necessitate a change in their outlook on Marqeta. The report was characterized as misleading, and Keefe, Bruyette & Woods does not view it as a significant negative catalyst that would affect their stance on Marqeta’s stock.
In summary, despite the claims made in J Capital’s short report, Keefe, Bruyette & Woods stands by their Market Perform rating and $4.50 price target for Marqeta, indicating no immediate change in their valuation of the company’s shares.
In other recent news, Marqeta Inc. reported better-than-expected financial results for the first quarter of 2025. The company achieved an earnings per share of -$0.02, surpassing the projected -$0.05, and generated revenue of $139 million, exceeding the anticipated $136.12 million. Additionally, Marqeta demonstrated a robust performance with a 27% year-over-year growth in total processing volume, reaching $84 billion. Despite these positive results, Marqeta faces scrutiny from J Capital Research, which criticized the company’s business model and regulatory challenges, highlighting an FBI investigation into its partner Sutton Bank and potential risks with its largest client, Cash App.
In other developments, JPMorgan upgraded Marqeta’s stock rating from Neutral to Overweight, raising the price target from $5.00 to $6.00. This upgrade reflects confidence in Marqeta’s progress in diversifying its revenue streams and reducing dependency on Block, which now accounts for 45% of its revenue, down from 71%. Marqeta is also expanding its capabilities in Europe and focusing on AI innovations, with ongoing efforts to enhance its platform and services. Despite challenges, these developments indicate a dynamic period for Marqeta as it navigates industry headwinds and seeks to strengthen its market position.
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