Nuvei (TSE:NVEI) (NASDAQ:NVEI) provides payment technology solutions to customers in North America, Europe, Asia, and Latin America. Its revenue comes from sales, fees, and subscriptions. Down over 80% from its 2021 high, some investors may be wondering if the stock is a bargain now. Analysts certainly think it is, as they believe the stock can almost double from here. Looking at its valuation, they aren’t unreasonable in believing that. Please note that all financial figures are in U.S. dollars unless otherwise stated.
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Nuvei’s Growth Has Been Slowing
Sometimes a stock may fall even though its business has been flourishing. Let’s see if that’s the case with NVEI. Well, the company’s revenue growth has certainly slowed down. While its revenue grew by more than 92% from Fiscal 2021 to 2022, the company’s latest quarter saw revenue growth of 7% (13% on a constant-currency basis). Of course, companies don’t keep up crazy growth rates forever, but it’s clear that the slowing economy has affected Nuvei. From March 2019 to March 2022, NVEI’s revenue grew consistently quarter-over-quarter. However, the past two quarters saw consecutive downticks in revenue, indicating a trend change.
Still, NVEI is profitable, as its adjusted earnings per share increased to $0.43 in Q3 2022 compared to $0.42 in Q3 2021. Additionally, on a trailing-12-month basis, the company reported $247.3 million in free cash flow (FCF).
Nuvei also reaffirmed its 2022 outlook as well as its medium and long-term forecasts. If Nuvei reaches the midpoint of its Q4 revenue forecast ($212 million based on a forecast of $197 million to $227 million), then its revenue will be in line with Q4 2021 and higher than Q3-2022’s revenue of $197.1 million.
Therefore, the business is holding up better than the stock’s performance suggests.
NVEI Stock May be Undervalued
Nuvei stock fell from glory because its stock was undoubtedly overvalued before. Now, things are much more reasonable. Analysts forecast $1.85 in EPS for Fiscal 2022 and $2.12 for the following year. This gives NVEI forward P/E ratios of 14.45x and 12.6x for 2022 and 2023, respectively. Considering NVEI’s high growth potential, it looks like it could be a value play here.
At the same time, though, beware that payment solutions companies face heavy competition and aren’t the strongest companies during recessions.
Analysts are Extremely Bullish on NVEI Stock
According to analysts, Nuvei has a Strong Buy consensus rating based on eight unanimous Buy ratings assigned in the past three months. The average NVEI price target of C$71.04 implies 95.8% upside potential. Recently, five-star Wolfe Research analyst Darrin Peller, ranked #263 out of 28,896 experts on TipRanks, reiterated a Buy rating on the stock with a US$35 price target (about C$47.21).
The Takeaway: Consider NVEI Stock
NVEI operates in the quickly-growing digital payments market. Therefore, the company should continue to see growth in the long term, especially since it grows through acquisitions as well. Now that it’s more reasonably priced and analysts expect high upside potential, the stock is worth considering for growth investors.
