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On Tuesday, UBS analyst Timothy Chiodo adjusted the price target for Repay (NASDAQ:RPAY) to $4.50, a decrease from the previous $7.50, while continuing to hold a Neutral rating on the stock. The stock, currently trading at $4.02, has experienced significant volatility, declining over 60% in the past year despite a recent 8.89% surge in the past week. According to InvestingPro analysis, Repay appears undervalued based on its Fair Value assessment. The revision follows Repay’s completion of its strategic review that was initially announced during the Q4 2024 earnings call. The outcome of the review has led to an increased investment in organic growth, particularly in the Enterprise direct sales channel. InvestingPro data shows the company maintains a strong financial position with a current ratio of 3.71, indicating robust liquidity to support these growth initiatives. The platform offers 8 additional key insights about Repay’s financial health, which has received a "GOOD" overall rating.
Repay has now introduced its fiscal year 2025 guidance, which it had withheld during the Q4 earnings call due to the ongoing strategic review. The company forecasts an acceleration in year-over-year sequential gross profit growth, excluding political revenue, with the fourth quarter expected to see high single-digit to low double-digit ranges. Free cash flow (FCF) for Q4 2025 is projected to be greater than 60%, compared to approximately 64% in Q4 2024.
The guidance provided by Repay assumes a stable macroeconomic environment. The company has observed resilient trends in its lending end-markets but has also recognized certain areas where consumer strength is waning. Despite the loss of three significant clients in the previous year, including a RCS client in Q3 (partial quarter), a lending communications client, and a high-margin Business Payments client in Q4, Repay’s gross profit in Q1 2025 grew in the low single digits when excluding these client losses. This growth suggests a headwind of approximately 5-7 percentage points, indicating potential acceleration in the underlying business throughout the year.
For Q1 earnings, Repay reported gross profit that slightly exceeded Wall Street’s expectations, with a decline of around 4% excluding political contributions. This performance was bolstered by the company’s Business Payments segment, which accounts for about 15% of gross profit. This segment declined 22% year-over-year excluding political revenue in Q4 but saw an increase of approximately 12% year-over-year in Q1. This improvement is seen as a positive indicator for the expected sequential acceleration in growth for the remainder of the year. The company maintains an impressive gross profit margin of 77.03% and has achieved 2.26% revenue growth over the last twelve months. For deeper insights into Repay’s financial performance and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro.
In other recent news, Repay Holdings Corporation reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of negative $0.09, which was significantly below the forecasted $0.22. The company’s revenue for the quarter was $77.3 million, falling short of the expected $83.92 million, marking a 4% year-over-year decline. Following these results, Keefe, Bruyette & Woods revised their price target for Repay to $4.50 from the previous $6.50, maintaining a Market Perform rating. Similarly, BMO Capital Markets adjusted their price target to $5.00 from $7.00, also maintaining a Market Perform rating. Despite these setbacks, Repay’s management remains focused on organic growth and anticipates normalized gross profit growth in the latter half of 2025. BMO Capital noted signs of stabilization in Repay’s organic growth, with expectations for growth acceleration driven by core accounts payable performance and enterprise client onboarding. The strategic review concluded with an increased share repurchase authorization, although some analysts found the outcome underwhelming. Repay’s management continues to express confidence in the company’s long-term growth potential, despite current challenges.
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