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Earnings Release: Here’s Why Analysts Cut Their Paysafe Limited (NYSE:PSFE) Price Target to US$3.25

Shareholders may have noticed this Paysafe Limited (NYSE:PSFE) filed its quarterly results this time last week. Initial reaction has not been positive, with shares down 8.9% to US$2.06 in the past week. Earnings are an important time for investors, as they can track the company’s performance, see what analysts are forecasting for the year ahead, and see if there has been a change in sentiment toward the company. So we rounded up the latest post-earnings forecasts to see what estimates are in store for next year.

See our latest analysis for Paysafe

Earnings-and-Revenue-Growth
NYSE:PSFE Earnings and Revenue Growth for August 13, 2022

Taking the latest results into account, Paysafe’s seven analysts currently expect revenue of US$1.48b in 2022, roughly in line with the past 12 months. Loss per share is expected to improve slightly, narrowing to US$2.47. Prior to this earnings announcement, analysts were modeling a loss of US$1.53b and US$1.58 per share in 2022. While this year’s revenue estimates have fallen, there has also been a significant expansion in losses per share, suggesting the consensus has somewhat of a mixed view on the stock.

The consensus price target fell 10% to US$3.25, with analysts clearly concerned about the company following a weak revenue and earnings outlook. This is not the only conclusion we can draw from this data, as some investors like to consider the spread in estimates when evaluating analysts’ price targets. Currently, the most bullish analysts value Paysafe at US$5.00 per share, with a high price of US$2.00. Notice the wide gap in analyst price targets? This suggests to us that there is a fairly wide range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance and whether the forecasts are more or less bullish compared to other companies in the industry. It is worth noting that the years of declining sales have come to an end with flat revenue forecast until the end of 2022. Historically, Paysafe’s sales have shrunk by around 1.1% annually over the past year. In contrast, our data indicates that other companies in a similar industry (with analyst coverage) are forecasting their revenue to grow by 12% per year. So it’s pretty clear that even though revenues are improving, Paysafe is still expected to grow slower than the industry.

The bottom line

The key takeaway is that analysts have increased their loss per share for the next year. Unfortunately, they also downgraded their revenue estimates, and our data suggests that revenue is expected to perform worse than the broader industry. Even so, earnings per share are more important to the intrinsic value of a business. The consensus price target fell measurably, with analysts seemingly unconvinced by the latest results, leading to a lower estimate of Paysafe’s future valuation.

With that said, the long-term trajectory of the company’s earnings is more important than next year. We have estimates – from multiple Paysafe analysts – going out to 2024 and you can see them here on our platform for free.

You can also view our analysis of Paysafe’s balance sheet and whether we think Paysafe is over-indebted here on our platform for free.

This article by Simply Wall Saint is general in nature. We provide commentary based on historical data and analyst forecasts and our articles are not intended to be financial advice. It does not recommend buying or selling any stock and does not take into account your objectives or your financial situation. We aim to bring you long-term focused analytics powered by fundamental data. Note that our analysis does not account for recent price-sensitive company announcements or qualitative material. Simply Wall St. has no position in any of the stocks mentioned.

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