Here's a summary of the Analyst Coverage for anyone who missed it. (12$ PT)
Paysign: An Emerging, Rapidly-Growing Niche Participant in FinTech; PT $12.00
Prepaid Card Market: Although prepaid cards are already in broad use across many
industry verticals, growth is expected to continue at an impressive rate. Data from
the Federal Reserve suggests that prepaid card transaction volumes will grow steadily
through 2022, reaching a market value of nearly $400 billion. A separate forecast from
ResearchAndMarkets.com estimates that this market (in the U.S. alone) should grow at
roughly 12%, annually through 2023, reaching a total market size $897 billion in 2023.
Paysign, Inc. is an emerging participant in the prepaid card space with impressive growth
potential. As such, we are initiating coverage with a Buy rating and $12.00 price target.
The PaySignTM Platform: As a participant in the prepaid card space, Paysign offers
vertically integrated payment processing and prepaid card programs and provides
innovative payment solutions to corporations, government agencies, universities,
healthcare entities, and other organizations. These payment solutions are adapted by
Paysign clients to drive customer loyalty and brand recognition, reward customers,
reduce administration costs and streamline operations.
Plasma Donor Payment Market: Plasma contains a composite of more than 700
proteins including clotting factor, albumin and immunoglobulin that are currently in wide
use as treatments for life-threatening conditions. Demand is high for these plasma
proteins (and related therapies) and the worldwide market has grown to a projected value
of $25.4 billion in 2019 with an expected 6.6% annual growth rate through 2024. The
US now supplies nearly two-thirds of all the blood plasma available in the world primarily
collected through a network of roughly 700 collection centers. Paysign currently owns
about one-third of the market for compensating plasma donors.
Earnings Model: Paysign generated revenues of $23.4 million in 2018—a jump of
53.8% year/year. We anticipate this type of growth to continue in 2019 as Q1 2019 was
quite impressive with revenues at $7.3MM, up 55% year/year. Guidance is for revenues
to approach $38 to $40 million for 2019, a projected growth rated of roughly 65%.
The bottom line is growing even faster as we forecast non-GAAP net income to reach
$11.6MM for calendar 2019, an increase of 130% on a year-over-year basis. For 2020 we
estimate revenues of $61 million and non-GAAP cash earning of $23.2 million or $0.48
per share.
Our Outlook: With an impressive start to the year (Q1 revenues up 55% y/y) we believe
Paysign's current market valuation is not reflective of the value of the company’s growing
presence in the prepaid card space. Given the expected revenue growth and the future
earnings potential, we believe the company should be valued more in line with its current
and potential earnings growth and other successful companies in the payments/business
services space. We estimate that in calendar 2019 Paysign is likely to continue to expand
its presence in the prepaid card space through the addition of more plasma centers,
a significant move into the prescription co-pay segment and the launch of its PaySign
Premier Card. With these and other initiatives, we estimate revenues will climb to $39.0
million in 2019 and climb another 57% to $61.0 million in calendar 2020, with non-GAAP
cash earnings of $23.2 million or $0.48 per share. Given this expected performance we
believe a fair valuation would be a 30x multiple on our estimated 2020 non-GAAP cash
earnings per share of $0.48. Discounting this number back to the present at 20% equates
to a fair value and our price target of $12.00.
AI
