Liberum raises target price on PayPoint

Analysts at Liberum raised their target price on payment services group PayPoint from 800.0p to 1,000.0p on Thursday after the group's full-year results came in ahead of estimates a day earlier.

Liberum noted that PayPoint's full-year results came in ahead due to a waiver of the management bonuses, leading the firm to propose a final dividend despite current economic uncertainties.

While the analysts acknowledged that current trading was impacted by the Covid-19 pandemic, they also said there were "clear signs of improvement".

Liberum increased its 2021 fully-diluted earnings per share estimates for PayPoint from 35.4p to 42.1p, noting unusual uncertainty, and also highlighted that £12.9m of IFRS 16 spot net debt in 2020 was "a little better than expected" - leading it to reduce its full-year 2021 net debt estimate from £27m to £7m.

The analysts also pointed to "robust" trading at PayPoint's pre-pay energy business, UK Bill & General, and some strong growth at MultiPay.

PayPoint's UK Retail Services unit was also praised for rolling out its PayPoint One service ahead of expectations, but noted it had since slowed, while the company's Parcels business was given credit for its "good momentum", aside from the effect of Covid-19.

Liberum reiterated its 'buy' rating on the firm.