Pagseguro Digital (PAGS – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Mario Pierry from Bank of America Securities maintained a Hold rating on the stock and has a $9.00 price target.
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Mario Pierry has given his Hold rating due to a combination of factors reflecting both positive momentum and potential challenges ahead for Pagseguro Digital. The company has shown impressive revenue growth, driven by strong total payment volume (TPV) expansion and effective repricing strategies, which have allowed it to exceed net income forecasts. However, despite these gains, the overall financial landscape remains challenging due to rising financial expenses linked to higher interest rates.
Pagseguro’s guidance for earnings per share (EPS) growth is promising, yet it comes with execution risks and macroeconomic uncertainties, particularly concerning the high Selic rate anticipated by year-end. Additionally, while TPV and loan portfolio growth are robust, the contraction in the number of active clients suggests a strategic shift towards prioritizing more profitable clients, which might pose risks to scaling. These mixed factors contribute to the Hold recommendation, reflecting a balanced view of the company’s growth potential against the backdrop of external financial pressures.
PAGS’s price has also changed dramatically for the past six months – from $14.590 to $8.160, which is a -44.07% drop .