Barclays upgrades Safecharge to 'overweight'
Barclays upgraded payments technology company SafeCharge to 'overweight' from 'equalweight' and lifted the price target to 420p from 335p on Friday as it said the company's strategy to migrate the portfolio to lower risk and larger customers is paying off.
Safecharge Intl Grp
€2.55
19:59 22/03/17
In addition, it said that with the purge of the back-book completed, the business is accelerating.
"Some of this is offset by the sharp compression in gross and net yield as larger customers IC++ pricing and some of the new signings are gateway only," Barclays said.
Still, it noted that SafeCharge has a strong technology offering and with a large and expanding market, it should benefit and become a credible acquirer, particularly in multi-source accounts.
"If it executes well, we see upside to 25x FY20E ex-cash or 515p, but we see this as unlikely to be achieved under the current shareholder structure."
SafeCharge said on Thursday that it had had a "strong" first half, with revenue up 26% and adjusted earnings before interest, taxes, depreciation and amortisation up 15%. The group also said in its interim results that it has enjoyed a good start to the second half of 2018, benefiting from continued growth from its existing customers and the launch of new clients.
"The board remains confident that the outcome for the year will be in line with market expectations, with revenue at the top-end of market expectations," it said.
At 1110 BST, the shares were up 1.1% to 310p.