Bank of America Securities analyst Mario Pierry maintained a Buy rating on Pagseguro Digital today and set a price target of $13.00.
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Mario Pierry has given his Buy rating due to a combination of factors that highlight Pagseguro Digital’s potential for growth and profitability. The company’s strategic plan, as discussed by senior management during recent investor meetings, includes a significant expansion of its loan book and the distribution of excess capital. If executed successfully, this plan could lead to an increase in earnings estimates and a potential re-rating of the stock’s valuation multiples. Additionally, the excess capital distribution is expected to yield a return of 17% through 2026.
Management’s expectations for Pagseguro Digital’s earnings growth are optimistic, with a projected gross profit CAGR of at least 10% and EPS CAGR of at least 16% through 2029. This growth is anticipated to be driven by operating efficiency gains rather than share buybacks. The expansion of the credit book, leveraging the company’s existing banking franchise and client base, is a key driver of this growth. Furthermore, management’s confidence is bolstered by recent improvements in the credit team and models, with expectations for ROE to increase from approximately 15% to over 20% by 2029. The combination of these strategic initiatives and financial metrics underpins the Buy rating.
In another report released on September 18, Citi also maintained a Buy rating on the stock with a $9.00 price target.