Analyst Reports (BTIG:$8 Target & Maxim Group: $9 Target)
For those who didn't see it i've included snippets of the recent analyst upgrades further below:
BTIG (Upgraded to 8$):
TPNL Unveils Guidance for 2019 Revenue Growth of
63% to 72%; Reiterating Buy, Raising PT to $8
We are reiterating our Buy recommendation on 3Pea International
(TPNL) and raising our price target to $8 (from $6) based on 16x the
company’s FY21E adjusted EBITDA of $23.2mm after the company this
morning announced 2019 revenue guidance of $38mm to $40mm,
representing an increase of 63% to 72% versus the prior year. This would
represent a significant acceleration from TPNL’s revenue growth CAGR of
39% since 2015.
- Management further stated that they expected to see continued
improvement in TPNL’s gross margin in 2019 – it was 52.6% in 3Q18 –
thanks to operational improvements and a favorable product mix.
- We had initiated coverage of TPNL yesterday after the market close
with a price target of $6 that was predicated in part on our view that
the company would generate $30.9mm in revenue during 2019 that
would represent a year-over-year increase of almost 33%. We believed
that most of that revenue would be derived from TPNL’s core plasma
donation prepaid debit card business while also flagging the
company’s copay pharma initiative and launch of a general purpose
reloadable (GPR) debit card as potential sources of upside.
- CEO Mark Newcomer explained in the news release announcing
TPNL’s 2019 guidance this morning that the company during 2018 had
successfully entered new verticals, the impact of which would be seen
in its 2019 operating results. Management told us that their 2019
guidance reflected a significant contribution from TPNL’s pharma
copay business during the year, which we had viewed as a source of
optionality and had not been incorporated into our estimates.
- In addition to providing 2019 revenue guidance, management this
morning reaffirmed their guidance provided in November for 2018
revenue in a range of $22.75mm to $23.75mm and adjusted EBITDA in
a range of $4.8mm to $5.3mm.
- Valuation: Our price target of $8 for TPNL is based on 16x the
company’s FY21E EBITDA of $23.2mm.
Maxim Group (Upgraded to 9$):
Thesis: 3PEA's established plasma donor line of business should provide a reliable revenue stream that limits downside and helps fund upside/new initiatives, the most promising of which is general purpose reloadable cards.
Highlights include:
- Good product mix (1) plasma donor payments (3PEA partners
with plasma donor centers to pay donors); (2) pharmaceutical co-pay assistance (3PEA partners with pharmaceutical companies which are launching new drugs to pay for the amount of the patient co-pay for the drug); (3) other corporate incentive/ rewards programs; and (4) general purpose reloadable (GPR) cards)
- GPRs have the most potential and they expect 3PEA to be successful with GPR cards for two main reasons: (1) it already has an established base of more than 2 million cardholders to whom it can offer/cross-sell GPR cards; and (2) 3PEA Chairman Dan Henry is the former CEO of one of the two largest providers of GPR card programs.
