Baird raises Paymentus shares target on strong growth

Baird, a global financial services firm, adjusted its price target for shares of Paymentus (NYSE: PAY), a leading provider of cloud-based bill payment technology.

The price target was increased to $25.00 from the previous $24.00. Baird has maintained an Outperform rating on the company's stock.

The adjustment follows Paymentus's consistent performance, with the company demonstrating over 25% revenue growth in the past three quarters. Baird's assessment suggests confidence in the company's continued success, anticipating that the third-quarter results will surpass expectations. Paymentus has a history of exceeding the top end of quarterly revenue guidance by approximately 3-4% over the past eight quarters.

Paymentus's market share is currently small, estimated at about 1-2%, but it is expanding. Baird highlights the company's very strong incremental margins and high-quality earnings as key factors in their positive outlook. The financial firm notes that Paymentus has good GAAP margins and low stock compensation, which contribute to the quality of its earnings.

In other recent news, Paymentus has demonstrated robust financial growth, exceeding its performance targets and attracting the attention of financial analysts. The payment technology company reported a significant 32.6% year-over-year increase in revenue, reaching $197.4 million for the second quarter.

Similarly, Paymentus's adjusted EBITDA rose by 58.6% to $22.5 million. These positive results have led the company to raise its full-year 2024 guidance, indicating a strong demand for its platform across various sectors.

Baird, a financial services firm, has taken note of Paymentus's impressive financial performance, reaffirming its Outperform rating and raising the price target for the company's shares to $24.00. Baird highlighted Paymentus's efficient backlog management and strong operational capability as contributing factors to the company's sustained growth.

Paymentus's future plans include potential mergers and acquisitions, aimed at sustaining its growth trajectory. The company expects its Q3 revenues to be between $188 million and $193 million, and full-year revenues to range from $770 million to $780 million. Full-year adjusted EBITDA is projected to be between $81 million and $85 million.

InvestingPro Insights

Recent data from InvestingPro aligns with Baird's optimistic outlook on Paymentus (NYSE: PAY). The company's market cap stands at $2.84 billion, reflecting its growing presence in the bill payment technology sector. Paymentus has demonstrated impressive revenue growth, with a 32.55% increase in the most recent quarter, surpassing the 25% growth rate mentioned in the article.

InvestingPro Tips highlight that Paymentus is expected to grow its net income this year, supporting Baird's positive stance. The company's strong financial performance is further evidenced by its profitability over the last twelve months and analysts' predictions of continued profitability this year.

Interestingly, while Paymentus trades at a high P/E ratio of 87.6, its PEG ratio is a low 0.24, suggesting it may be undervalued relative to its growth prospects. This could explain Baird's decision to raise the price target, as the company's growth potential may not be fully reflected in its current stock price.

For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for Paymentus, providing deeper insights into the company's financial health and market position.

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