In a report released today, Fred Mendes from Bank of America Securities reiterated a Buy rating on VTEX (VTEX – Research Report), with a price target of $8.50.
Fred Mendes based his Buy rating of VTEX’s stock on a number of key factors. Firstly, VTEX’s robust Q3 performance was a significant contributor, with the company achieving a net revenue of US$51 million, exceeding the Bank of America’s estimate and marking a 31% YoY growth. The company also reached an EBITDA margin of 6%, surpassing bullish expectations and showing a significant QoQ growth. This expansion was supported by a solid gross margin growth. The company also managed to minimize net loss, which came in at -US$2.4mn, compared to the projected -US$3.8mn.
Moreover, VTEX’s resilience amidst a challenging e-commerce market was another factor that informed Mendes’ rating. Despite the tough market conditions, the company managed to achieve a top-line growth of 25% YoY. These results, along with VTEX’s ability to improve margins through operational leverage, reinforced Mendes’ bullish stance. Moving forward, he expects the EBITDA margin to continue accelerating. The Buy rating was also influenced by the company’s updated revenue guidance for 4Q and FY23, along with an anticipated strong outlook for continuous revenue and margin expansion. Consequently, Mendes revised his price objective to US$8.5, driven by changes in estimates.
According to TipRanks, Mendes is a 4-star analyst with an average return of 16.4% and a 73.08% success rate.
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VTEX (VTEX) Company Description:
Vtex provides a software-as-a-service digital commerce platform for enterprise brands and retailers. Its platform enables customers to execute their commerce strategy, including building online stores, integrating and managing orders across channels, and creating marketplaces to sell products from third-party vendors. It generates maximum revenues from Brazil followed by Latin America and the rest of the world.
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