RBC says catalysts to come. We think momentum can continue for SZL through FY21e. Canada's share of sales is increasing, the partnership with Ally Lending to offer longer-term installments will launch (which will be accretive to unit economics), Sezzle Up uptake is growing nicely and we view this feature as a differentiator for SZL while it also will lower funding costs, and further significant government stimulus is in the pipeline.
RBC says Sezzle is favourite stock in small-cap BNPL: SZL is trading on EV/Sales of 13x June '21e, inline with ZIP at ~14x and a significant discount to APT at ~40x. However, as we show below, on a number of other metrics SZL remains relatively cheap and remains our preferred small-cap BNPL player. Retain Outperform, Spec. Risk rating, PT unchanged at $11.00/share.
SZL Price at posting:
$8.90 Sentiment: Buy Disclosure: Held
