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On Friday, Keefe, Bruyette & Woods adjusted their financial outlook on VersaPay Corp. (VPY:CN), reducing the price target from Cdn$22.00 to Cdn$21.00. Despite this change, the firm maintained its Outperform rating on the company’s stock. The adjustment comes as VersaPay announces plans to transition to a U.S.-based corporate structure, a move that analysts at Keefe, Bruyette & Woods view as beneficial for shareholders.
According to the firm’s analyst, the realignment to a U.S. domicile is expected to offer several advantages, including a streamlined corporate framework and the transition to financial reporting in U.S. dollars. This strategic move is also aimed at phasing out the trading of VersaPay’s shares on the Toronto Stock Exchange (TSX) and paving the way for eligibility in the Russell indices, which could provide broader exposure to U.S. investors.
Keefe, Bruyette & Woods also noted the timing of their revised model, which comes just ahead of VersaPay’s second fiscal quarter earnings report scheduled for next week. The updated model reflects a more conservative stance, taking into account an increase in reserves due to the weakening Canadian economy, as evidenced by the company’s first fiscal quarter results. Additional expenses associated with VersaPay’s entry into the U.S. market have also been considered in the firm’s reassessment.
The analyst’s commentary highlights the potential for these strategic changes to enhance shareholder value. Although the price target has been lowered, the Outperform rating suggests that the firm remains optimistic about VersaPay’s performance prospects.
Investors will be looking forward to VersaPay’s upcoming earnings report to gauge the impact of these developments on the company’s financial health and to assess the progress of its transition to a U.S.-based entity.
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