Wise stock upgraded to “buy” by Rothschild on 48% upside, Platform growth boom

Investing.com -- Rothschild & Co Redburn upgraded fintech firm Wise Plc to “buy” from “neutral,” raising its target price to £13.90 from £9.40, implying a potential 48% upside. 

The upgrade reflects stronger-than-expected growth prospects in Wise’s expanding Platform business, which analysts said now outweighs disruption risks from stablecoins.

At the time of publication, Wise’s share price stood at 940p, with a market capitalization of £12 billion. 

The brokerage projected 23% underlying income growth and 15% underlying earnings per share growth between fiscal years 2025 and 2028, compared with consensus forecasts of 18% and 12%, respectively. 

Rothschild & Co Redburn’s revised model also expects underlying income of £1.63 billion in FY26, £2.07 billion in FY27, and £2.51 billion in FY28, alongside corresponding underlying profit before tax of £284 million, £351 million, and £424 million.

The brokerage emphasized that Wise’s Platform business, which allows banks and fintechs to use its international money transfer infrastructure, has become a major growth driver. 

Key partnerships with Morgan Stanley, Nubank, Itaú, UniCredit, Standard Chartered, and Raiffeisen are expected to ramp up transaction volumes significantly. 

The analysts forecast Platform volumes to climb from £6 billion in FY25 to £163 billion in FY30, implying a 58% compound annual growth rate.

Incorporating these developments, Rothschild & Co Redburn raised Wise’s total volume estimates to £190 billion in FY26, £258 billion in FY27, and £326 billion in FY28, between 5% and 21% ahead of market consensus. 

Despite higher volumes, margins are projected to remain stable, with underlying profit before tax margins ranging from 16.9% to 17.4% over the period. 

The analysts noted Wise’s “capital-light” structure and direct access to global payment systems as key strengths supporting long-term scalability.

The brokerage’s discounted cash flow model assumed a 10.3% weighted average cost of capital, 35% terminal operating margin, and 2.5% terminal growth rate, resulting in an enterprise value of £13.37 billion and equity value of £14.63 billion. 

The analysts said Wise’s valuation remains attractive compared to other consumer-facing payments companies, with a low growth-adjusted price-to-earnings multiple despite higher projected earnings momentum.

While the report acknowledged that stablecoins could pressure Wise’s Personal and Business transfer segments, particularly in liquid currency corridors involving USD, EUR, and GBP, it argued that the broader opportunity in Wise Platform “dwarfs” that risk. 

The analysts estimated stablecoin exposure of about 11% of group underlying income in Personal transfers and 4% in Business transfers, calling the overall threat “insignificant” relative to the Platform’s expansion potential.

Rothschild & Co Redburn said the market underestimates Wise’s decade-long 25%+ volume growth opportunity, led by the Platform segment, adding that its upgraded rating and price target reflect that conviction.