After a 9% drop: Analysts recommend increasing exposure to the stock
Despite the sharp decline in share prices following the latest reports, the investment house William Blair is convinced that the company's long-term thesis has not changed and points to the next growth engines.
A stock research report by the investment firm William Blair, published today (Tuesday) following Nayax's second-quarter reports, presents a relatively optimistic picture regarding the future of the Israeli fintech company. Despite a decline of approximately 9% in the stock following the publication of the reports, analysts believe that the long-term thesis remains unchanged and even see the decline as an opportunity to increase exposure to the company.
Nayax's revenue in the second quarter exceeded forecasts by approximately 3 million dollars, but the EBITDA was lower than expected by approximately 3.8 million dollars, mainly due to lower profit margins on hardware sales. At the same time, organic revenue grew by 21.4%, device sales jumped by 40%, and recurring revenue increased by 24%. The average transaction size through the company's systems grew by 15%, the fourth consecutive quarter in which double-digit growth is recorded in this metric.
Nayax's management continues to set a target of 35% annual growth and aims to reach revenue of approximately 1 billion dollars and an adjusted EBITDA of approximately 300 million dollars by 2028. Alongside its activity in the payments sector, the company is expanding into additional areas, including electric vehicle charging, staffed retail, and financial services.
One of the key moves is the entry into the banking sector in the USA. Nayax has submitted an application for a license to establish Nayax America Bank in Connecticut, with the goal of offering its approximately 125,000 customers credit services, loans, and expense management through the Yellow Account. In addition, the company continues to use acquisitions as a growth engine, with the acquisition of Lynkwell for 26 million dollars intended to strengthen its activity in the field of electric vehicle charging stations.
The research also addresses a cyber extortion event that Nayax experienced in July. According to the document, the attackers claimed to have obtained more than a billion credit card records and about 100 terabytes of data, but the core systems and payment authentication data were not compromised, and the company did not comply with the extortion demands.
At the end of the quarter, Nayax held 304 million dollars in cash and short-term deposits, compared to a total debt of 349 million dollars. Alongside the growth potential, analysts note risks including the state of the economy, competition, the company's performance, the success of acquisitions, and the relatively low liquidity of the stock.
