UBS cuts Flywire stock rating, slashes price target to $15 from $25

On Wednesday, UBS analyst Timothy Chiodo adjusted the firm’s stance on Flywire stock, downgrading it from Buy to Neutral. The revised price target is now set at $15.00, a significant reduction from the previous $25.00. The stock, currently trading at $17.64, has seen a 26.87% decline over the past year, with analyst targets ranging from $20 to $29. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score of 2.53 out of 5. The downgrade was prompted by Flywire’s updated fiscal year 2025 revenue growth forecast, which falls short of analysts’ expectations.

Flywire, a provider of global payment and receivables solutions, has guided its fiscal year 2025 FXN revenue growth, excluding ancillary services and the impact of its $330 million acquisition of Sertifi, to be between 10-14%. This forecast is considerably lower than the Street’s estimate of approximately 22%. Moreover, the company’s midpoint guidance for 2025 indicates a rule of 31, deviating from its previous guidance of aspiring to be a rule of 40 company. Despite these challenges, InvestingPro data reveals strong fundamentals with a current ratio of 2.33 and zero debt-to-equity ratio. Get access to 7 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

The company’s revised outlook is partly attributed to persistent demand challenges in Canada and Australia, which account for about 15% of Flywire’s total revenue in 2024. Both markets are expected to see a decline exceeding 30% year-over-year, contrasting with earlier projections of flat growth in Canada and at least average growth in Australia. Additionally, Flywire noted expectations of visa softness in the United States, which the company believes reflects administrative issues rather than a decrease in demand. Despite these headwinds, the company maintains a healthy gross profit margin of 63.61% and has demonstrated revenue growth of 26.5% in the last twelve months.

In response to these challenges, Flywire is undertaking an operational and strategic review. This initiative aims to realign the company’s resources with areas of high growth potential and to reassess its most important geographies, business sectors, and possible adjacent markets. The review is intended to optimize Flywire’s strategic focus moving forward.

In other recent news, Flywire Corporation has reported its fourth-quarter 2024 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.12, which was below the anticipated -$0.002, and revenue of $117.6 million, falling short of the expected $120.26 million. Despite achieving a 17.4% year-over-year revenue increase, these results were overshadowed by the earnings miss and an announcement of restructuring, which will affect 10% of its workforce. Deutsche Bank (ETR:DBKGn) responded to these developments by downgrading Flywire’s stock from "Buy" to "Hold" and reducing the price target from $26.00 to $16.00. The downgrade was attributed to disappointing revenue figures and a fiscal year 2025 outlook that did not meet expectations. Flywire’s challenges are particularly evident in the Canadian and Australian education markets, where revenue is expected to decline by 30% due to visa policy changes. Meanwhile, the company has acquired Certify, with the acquisition projected to contribute $35-40 million in revenue for 2025, supporting Flywire’s growth strategy.

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