On Monday, BofA Securities updated its stance on Marqeta Inc. (NASDAQ:MQ), the modern card issuing platform provider, by raising the stock's rating to Buy from a previous Neutral. The firm also set a new price target of $7.00 for the company's shares.
The upgrade comes after a careful evaluation of Marqeta's business prospects. BofA Securities highlighted the company's solid near-term visibility, with over 75% of its Total Payment Volume (TPV) already renewed. Additionally, the firm recognized Marqeta's potential for long-term opportunities, especially in the credit sector, which is expected to contribute to a robust medium-term top-line growth of approximately 20% in the 2025-2026 timeframe.
"Coupled with lagging performance of the stock post-Investor Day, this represents an attractive entry point," said BofA.
InvestingPro Insights
Following the update from BofA Securities on Marqeta Inc. (NASDAQ:MQ), investors are looking closely at the company's financial health and market position. With a market capitalization of $3.01 billion and a recent price close at $5.79, Marqeta's stock reflects a blend of challenges and potential that investors should consider.
One of the key InvestingPro Tips to note is that Marqeta's management has been actively buying back shares, which could signal confidence in the company's future prospects. This aligns with BofA Securities' upgrade and may further support the notion that the current valuation presents an attractive opportunity for investors.
Despite Marqeta not being profitable over the last twelve months, with a negative P/E ratio of -15.03 and an adjusted P/E ratio for the same period of -13.76, the company's liquid assets do exceed its short-term obligations. This financial resilience, coupled with a gross profit margin of 43.8%, provides a cushion as the company navigates its growth strategy, particularly in the credit sector as highlighted by BofA Securities.
However, it's important for investors to be aware of the stock's volatility, as noted in another InvestingPro Tip. The price has seen significant fluctuations, with a 1-month total return of -7.83%, yet analysts have revised their earnings upwards for the upcoming period, suggesting potential for recovery.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available on InvestingPro. Utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a comprehensive set of tips to inform your investment decisions.
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