Wise is among the best names in a group of top 25 global fintech stocks, according to a leading broker, as the money transfer firm is expected to post strong growth this year.
Investment bank Peel Hunt upgraded its recommendation on the London-based fintech’s stock to buy from hold on Tuesday, also raising its price target to 1,000p from 950p.
“Wise is one of the few companies in the global fintech space that has demonstrated resilience, strong growth and high margins, and therefore deserves a premium in our view,” analysts said in a note.
Peel Hunt highlighted Wise’s scale of operations, with 12.4m active personal customers, as well as its roughly 18 per cent estimated revenue compound annual growth rate from 2024 to 2027 and underlying margins of around 30 per cent.
It raised its 2024 estimate for Wise’s earnings before tax (EBITDA) by seven per cent to £578m, citing higher net interest income “flowing through”, gross margins and operating leverage.
“Our bull-case scenario suggests there is significant operating leverage inherent in Wise’s model, which we believe the street is missing,” analysts said.
“We believe the current valuation does no justice to Wise’s strong growth, high margins and superior value proposition.”
Wise’s shares dropped 10 per cent in April after its fourth-quarter revenue missed analysts’ estimates.
Still, its stock price has gained 35 per cent over the last 12 months as the firm grew its customer base, was boosted by higher interest rates and outpaced rivals like Monese and Revolut.
“Recent share price weakness, despite no bottom-line downgrades, allows investors another bite at a quality, high-growth equity story,” Peel Hunt analysts said.
Wise’s shares traded mostly flat on Tuesday morning.