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On Tuesday, UBS analyst Chris Zhang adjusted the price target for International Money Express (NASDAQ:IMXI) shares, reducing it to $17 from the previous $22, while keeping a Neutral rating on the stock. The stock, currently trading at $14.80, has experienced significant pressure, falling nearly 18% in the past week alone. According to InvestingPro data, the company’s shares are now trading well below their 52-week high of $23.28. The revision follows International Money Express’s announcement that after a roughly four-month strategic review, the company has decided to continue operating as a public entity and has revealed its medium-term strategy to increase its Digital business segment significantly through heightened marketing efforts.
International Money Express, also known as Intermex, has experienced substantial growth in its Retail business throughout 2023, reaching a scale that now eclipses its Digital segment. With a healthy gross profit margin of 34% and strong financial health indicators - including a current ratio of 1.96 showing solid liquidity - the company has maintained robust fundamentals. However, the company’s Digital business is encountering stiff competition from larger digital-focused competitors and the well-established digital operations of existing industry players. This competitive landscape may challenge Intermex’s current favorable unit economics, especially as the company aims for an ambitious implied compound annual growth rate (CAGR) of over 85% for its Digital business revenues from 2024 to 2027.
Despite these competitive pressures, UBS believes that Intermex’s strategic plan is a move in the right direction. The firm’s initiative to evolve into a comprehensive omnichannel remittances provider is seen as a necessary step to secure long-term growth. By enhancing its digital offerings, Intermex aims to align more closely with the broader market’s shift towards digital channels in the coming years.
UBS’s neutral stance on Intermex stock is based on a wait-and-see approach for signs of capital-efficient growth within the company’s Digital business at a larger scale. The firm’s analysts are looking for evidence of Intermex’s ability to grow its digital operations effectively before adopting a more positive outlook on the stock’s potential. InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips indicating the stock is in oversold territory. Subscribers to InvestingPro can access 11 more exclusive tips and a comprehensive Pro Research Report for deeper insights into IMXI’s valuation and growth prospects.
In other recent news, International Money Express reported its fourth-quarter 2024 earnings, which did not meet analyst expectations. The company posted an adjusted earnings per share (EPS) of $0.57, falling short of the forecasted $0.60, and revenues of $164.8 million, below the expected $169.01 million. Despite these results, the digital segment showed robust growth, with digital revenue increasing by 60% for the full year. Needham analysts responded by lowering their price target for International Money Express from $25 to $20 while maintaining a Buy rating, indicating optimism about the company’s long-term digital strategy.
The company’s management has set ambitious targets for fiscal year 2027, with a focus on scaling digital transactions, which have shown significant growth. For 2025, International Money Express provided cautious revenue guidance, reflecting ongoing challenges in the remittance markets, particularly in Mexico. The company plans to continue investing in digital customer acquisition and retail expansion, with a target of $40 million in share repurchases. Additionally, the recent acquisition of Amigo Paisano is expected to enhance the company’s digital capabilities and improve unit economics.
Analysts from Needham remain optimistic about the company’s market position, viewing the current headwinds as cyclical. They emphasized the potential for recovery as International Money Express capitalizes on its growing digital business. Management also highlighted their omni-channel strategy and commitment to serving customers across both retail and digital channels, reinforcing confidence in the company’s future growth prospects.
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