Wise Plc remains a potent outperformer in its cross-border payments sector with scope for further gains, according to data from BridgeWise, a specialist in AI-driven stock market analysis. Shares in the UK-based foreign exchange tech firm have been bouncing between £5 and £6.50 since the start of the year, with a recent bullish move to £6.65 on 26-27 June.
Wise has already published some impressive and balanced results that demonstrate its underlying strength, as well as scoring well across growth, income AND value factors. BridgeWise rated it a Strong Buy this week, scoring it at 92% on its fundamentals.
“Money transfer powerhouse”
Described in some quarters as “a money transfer powerhouse” Wise reported recently that it had more than tripled annual profits and saw a considerable jump in customer numbers. Profits surged to GBP 146.5m, up from £43.9m a year ago. The company also reported that it now has over 10m customers, a jump of 34%. The management team, led by Estonian entrepreneur Kristo Käärmann, says it is going to continue to invest in infrastructure over the coming year, as well as launching new features.
Wise put out some punchy earnings guidance on 27 June, predicting growth in the range of 28-33%. However shares are already looking pricy, at 55.5x PE. While not excessive for some tech stocks, it seems to be tempting some investors to profit take above £6.50, which is not surprising. Recent share price action has also led to more of a negative technical score for the company’s 5 day MA, although longer time frame indicators still look positive.
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BridgeWise said that Wise appears likely to maintain its strong balance sheet metrics and momentum going forward and is sporting a positive trend line in terms of its cash and cash equivalents. This marks it out as a more impressive stock versus close peers in the market like Computacenter and Softcat. Return factors and EBITDA are also looking very positive. The return on equity and steadily improving EBITDA factors look most likely to impact the company’s further upside.
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Wise shares continue to make headway despite profit taking. At time of writing they were trading at 611p and were still up over 1.06% for the last 30 days. Longer term investors will have seen a return of 10.31% YTD. Compare this with PayPal Holdings in the US which is down over 11% YTD. Mastercard shares are up 13.3% over the same time frame. This demonstrates that investors need to be canny when picking stocks in the payments space.
Wise Plc – key considerations
- Focused play in the fast-growing and economically resilient cross-border payments sector
- Relatively high PE ratio at over 50x
- CEO currently being probed by FCA after failing to pay taxes
- Käärmann and finance head Matt Briers both set to leave business (Käärmann is taking a sabbatical)
- Listed in London in 2021
- Resistance level for the shares at the £6.50 to £7.00 level (profit taking)
