Broker Valuations

Macquarie Initiation of coverage with Outperform

COMMENTARY

Macquarie highlights the diversified nature of EML Payments with the company dealing in issue and management of physical and digital and prepaid stored-value products ranging from reloadable cards to traditional, single-store gift cards.

The broker expects the company to continue its strategy of diversifying away from the physical gift cards business and towards incentive programs and digital cards.

In FY21, about $19-$20bn of gross debit value (GDV) is expected to be processed with the broker forecasting an FY22 5-year compounded annual growth rate of 31% for revenue and 29% for gross profit.

Since about 45% of the GDV is generated mostly in December, the broker fears the lockdown measures in Europe, if extended over Christmas, present a downside risk to its FY21 forecasts.

Macquarie initiates coverage with an Outperform rating and a target price of $4.20.

FORECAST
Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 9.10 cents.
Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of 15.20 cents.