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Marqeta (NASDAQ:MQ) shares are rising 2.1% in Tuesday premarket trading after Morgan Stanley analyst James Faucette upped the card issuing platform to Overweight from Equal-weight.
With shares of Marqeta (MQ) off almost 70% over the past year, an "entry point looks attractive on a growth-adjusted basis" in relation to its meaningful business exposure to Block (SQ), Faucette wrote in a note. His price target of $15 per share implies 54% upside from Monday's close.
On a fundamental basis, Marqeta's (MQ) "non-SQ vertical exposure – particularly Expense Management – showing robust growth, along with emerging traction across International, Credit, and Powered," the analyst explained. As of Q1, 66% of Marqeta's revenue was exposed to Block's (SQ) businesses, namely Cash App and Afterpay (OTCPK:AFTPF) (OTCPK:AFTPY).
In turn, Faucette bumped up his 2022 estimate on total processing volume to $162.5B vs. $159.1B in the prior view. And sees full-year gross profit of $321.9M compared with $305.9M in the previous forecast.
Moreover, adjusted EBITDA margin is expected to remain negative through 2022-2023 until turning positive in 2024, the note read. Marqeta's (MQ) EBITDA margin stands at -34.25% on a trailing twelve month basis, compared with the sector median of +13.35%.
See why SA contributor Jared Simons views Marqeta (MQ) as a Strong Buy.
Last week (May 19), Marqeta added Evolve as a bank partner to enhance its offering.