Tyro on 'verge of margin expansion'Article in The Australian...

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