UBS analysts initiate coverage of TYR with a BUY rating

Tyro on 'verge of margin expansion'
Article in The Australian Business Live Market Updates

UBS analysts initiate coverage of Tyro Payments with a buy rating as it approaches "earnings inflection".

The price target is set at $2.30 per share with the current $1.68 price offering "an attractive entry point to Australia's 5th largest payments terminal provider, a business on the verge of margin expansion and positive FCF (free cash flow)".

UBS analyst Tim Piper says Tyro has built a broader payments ecosystem than competing acquirers, with the best integrations into point of sales partners, a growing range of payment functionality tailored to the specific verticals, and a simple, streamlined banking offering which can drive incremental gross profit over time.

"We believe investors should focus on valuation multiples through a medium-term earnings lens, given our investment case hinges on scalability and operating leverage.

"The key headwind in our view is high levels of competitive intensity (SMB & enterprise), while the rollout/evolution of the terminal hardware offering will also be important given the age of the current fleet (from both a merchant offering and CAPEX perspective)."

https://www.theaustralian.com.au/business/trading-day/live-markets-coverage-plus-analysis-and-opinion/live-coverage/743a63dd2d7d5d12b6a8bd0bff0fa6a3