AvidXchange Holdings: Hold Rating Maintained Amid Growth Sustainability Concerns

In a report released yesterday, Andrew Bauch from Wells Fargo maintained a Hold rating on AvidXchange Holdings (AVDX – Research Report), with a price target of $13.00.

Andrew Bauch has given his Hold rating due to a combination of factors surrounding AvidXchange Holdings. While the company exhibited commendable first-quarter performance, there are concerns about its ability to sustain revenue growth exceeding 20%, given the uncertain volume outlook and potential diminishing returns from float contributions. Despite these worries, the management remains optimistic, citing positive trends like new partnerships and product launches, which they expect to yield higher returns as the year unfolds. However, these factors are viewed with a degree of caution due to the early stages of these initiatives and the continued influence of a cautious macroeconomic environment.

Moreover, Bauch takes note of the company’s diligent rollout of the Payments Accelerator and its anticipated impact on the efficiency of new user onboarding—though he suggests a conservative outlook on its near-term contributions to growth. He acknowledges AvidXchange’s effective management of unit cost efficiencies and transaction yield growth, leading to a robust EBITDA performance. Nonetheless, the lack of significant positive developments in the quarter, coupled with the broader market sentiment, doesn’t justify a more bullish stance at this time, resulting in the decision to maintain a Hold rating with a price target of $13, based on 6x the firm’s estimated 2025 gross profit.

Bauch covers the Technology sector, focusing on stocks such as Shopify, Block, and Affirm Holdings. According to TipRanks, Bauch has an average return of -9.5% and a 39.44% success rate on recommended stocks.

In another report released yesterday, KBW also assigned a Hold rating to the stock with a $13.50 price target.

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AvidXchange Holdings (AVDX) Company Description:

AvidXchange Holdings Inc is a provider of AP automation software and payment solutions for middle-market businesses and their suppliers. It generates the majority of its sales from Payment revenue followed by Software revenue and Services revenue.