Dutch payments firm Adyen’s stock received a new upgrade on Wall Street on Wednesday, marking the sixth upgrade the fintech stock has seen this year. The move reflects a growing positive sentiment towards the company’s shares, which are up 35% year-to-date.
Morgan Stanley upgrades fintech stock Adyen
The latest vote of confidence in Adyen NV (OTC:ADYEY) (AS:ADYEN) comes from Morgan Stanley analysts, who have revised their cohort analysis, now projecting approximately a 29% compound annual growth rate (CAGR) in volume and a 23% CAGR in net revenue through 2028.
The analysis, bolstered by recent gains in new merchant partnerships, reinforces their growth expectations for the fiscal year 2024.
As a result, the Wall Street giant’s analysts raised the rating on the fintech stock from Equal Weight to Overweight and lifted the price target from €1,205.00 to €1,850.
“Our analysis provides us with increased confidence around near-term growth as well as Adyen's ability to compound in the mid-20's % longer term. In the short term, our analysis of Adyen's new merchant wins underpins our increased 2024 growth assumptions,” they wrote in the note.
For the fiscal year 2024, Morgan Stanley’s projections for the company’s net revenue and EBITDA are 2% higher than the consensus.
Analysts said their research shows how new merchant acquisitions impact growth in the subsequent year, which better explains Adyen's volatile volume growth in FY23.
Specifically, the analysis suggests that the subdued volume growth seen in FY23 can be attributed, in part, to a decline in new business during FY22, where there was a 33% drop in volume from new cohorts compared to FY21, a trend tied to reduced investments.
“However, given Adyen's increased investments in sales and distribution, we think strong new customer volume in FY23 underpins volume/net revenue growth well in FY24,” Morgan Stanley’s team added.
More upgrades earlier in 2024
Apart from Morgan Stanley, Citi Research analysts also shared similarly bullish views on Adyen on Wednesday, reiterating the fintech stock as their top pick.
“Better e-commerce data, competitive intensity developments and comments at our TMT conference support our positive view as top pick in the sector,” said Citi analysts in their note on the European payments market.
Including Morgan Stanley, the Dutch company’s stock was upgraded six times since the start of 2024. Other investment firms that raised their rating on Adyen include HSBC, Wolfe Research, TD Cowen, Exane BNP Paribas, and NewStreet Research.
Adyen shares are up more than 34% year-to-date, the bulk of which was driven by the company’s robust sales growth and better-than-expected profit for 2023.
The fintech firm reported its net revenue at 1.626 billion euros ($1.75 billion), marking a 22% increase from the previous year, aligning closely with the market expectations, which were set at 1.636 billion euros according to LSEG.
The company's EBITDA reached 743.0 million euros, showing a modest 2% growth year-over-year. This figure significantly exceeds analysts' projections of 254.3 million euros, as reported by LSEG.
Adyen attributed its net revenue surge to “continued growth across our existing customer base consistent with our underlying land-and-expand fundamentals.”