Shares of Paysafe (NYSE:PSFE) are popping higher today on potentially encouraging news. Releasing its results for the third quarter, management said that it may buy back up to $50 million of its common stock. With the company maintaining its full-year outlook, PSFE stock is receiving a much-needed double-digit-percentage boost.
First off, the buyback announcement appears to be driving the bulk of the positive sentiment on Tuesday. “With our healthy cash flow generation and consistent progress towards reducing our net leverage ratio over the last several quarters, we believe now is the appropriate time to include share repurchases as part of our capital allocation strategy,” said Chief Financial Officer Alex Gersh.
However, according to a Seeking Alpha report, Paysafe — which offers services such as payment processing and digital wallets — still anticipates using most of the cash in its war chest to reduce leverage. Specifically, the outlet notes that the company’s net leverage — defined as net debt-to-last 12-month adjusted EBITDA — “dropped to 5.1x at Sept. 30, 2023, compared with 5.8x at Dec. 31, 2022.”
PSFE Stock Takes Slow Q3 Report in Stride
By itself, Paysafe’s Q3 report may have left investors with questions about the viability of PSFE stock. According to Barron’s, the company reported EPS of 57 cents for the quarter. That was a bit lower than the 60 cents anticipated by analysts, per FactSet data.
The company’s top-line performance wasn’t much help, either. Ringing up sales of $396.4 million, sales for the quarter slipped just under Wall Street’s consensus view of $398.2 million. However, it’s fair to point out that in Q3 2022, Paysafe posted revenue of $366 million. So, forward progress exists for the company — just not quite at the level analysts hoped for.
Still, management said that it’s on pace to achieve its full-year targets despite the Q3 miss. Adjusted EBITDA is expected to land between $454 million and $462 million for the full year. That’s right in line with the Street’s estimate of $459 million. This guidance also “matched a forecast the company issued in August.”
On the top line, Paysafe anticipates full-year revenue to hit between $1.595 billion and $1.608 billion as well, which also generally aligns with analysts’ target for $1.604 billion in sales. Further, with that sales outlook aligning with prior guidance, PSFE stock is enjoying another measure of support.
Why It Matters
Broadly speaking, PSFE stock is also benefiting from a key tailwind. Per Barron’s, the equities sector is moving up as government data indicates that the rate of inflation slowed more than expected in October. With higher prices naturally crimping consumer sentiment, this news is likely buoying sentiment.
However, at the moment, analysts aren’t completely convinced on PSFE stock, rating it a consensus hold. This assessment breaks down as one buy, two holds and one sell. Still, the average price target for shares stands at $27.25, thanks to BMO Capital’s generous price forecast of $64 per share.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
