Wells Fargo analyst Andrew Bauch maintained a Hold rating on Marqeta (MQ – Research Report) yesterday and set a price target of $7.00.
Geoff Meacham has given his Hold rating due to a combination of factors concerning Marqeta’s stock (MQ). One key aspect is the cautious perspective on the company’s long-term potential, which at the moment appears speculative. Despite the company providing a mid-term roadmap that investors were looking for, there are still reservations about the conservative nature of long-term targets until the company overcomes certain transitory challenges such as the Square renewal. The raised price target to $7 reflects an improved short-term outlook but is tempered by the difficulties in assessing the conservatism of future bookings growth, especially with significant portions expected from unproven or emerging business vectors.
Moreover, the competitive landscape for Marqeta remains a concern, with management acknowledging the risk of clients seeking redundancies across card issuers. However, the risk/reward balance seems favorable for MQ when factoring in the competitive dynamics and guidance provided. The forecast for gross profit growth in 2024 is promising, with a normalized year-over-year increase expected to be around 20%, considering transitory headwinds are excluded. Despite these positive indicators, the report suggests that a sustainable positive EBITDA is still a year out, and with the company’s rule of 40 being the lowest among peers, the current stock price seems aligned with its intrinsic value, leading to a Hold recommendation.
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Marqeta (MQ) Company Description:
Marqeta Inc is a modern card issuing platform. Its platform empowers businesses like Affirm, DoorDash, Instacart, Klarna, and Square to create customized payment cards that provide innovative payment experiences for their customers and end-users. It derives the majority of revenue from Interchange Fees generated by card transactions through its platform. The company also generates revenue from other processing services, including monthly platform access, ATM fees, fraud monitoring, and tokenization services.
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