Boku price target halved by Deutsche Bank after warning Proactive uses images sourced from Shutterstock
Deutsche Bank slashed its target price for Boku Inc (AIM:BOKU) shares after the mobile payments company warned first-half revenue and earnings would miss expectations following customer delays and the loss of transaction volumes in one market.
The company said it expects revenue of about $66.5 million for the six months to June, well below Deutsche Bank’s previous forecast of $75 million.
Adjusted EBITDA is expected to be around $19.3 million, compared with the broker’s $24 million estimate.
Deutsche analyst Tintin Stormont said the shortfall reflected three factors, the first being that a key merchant adopted a dual-sourcing strategy, reducing Boku’s share of payment volumes in one market, although management expects this to be more than offset as the same customer expands into several new markets over the coming months.
Boku also suffered the suspension of two direct carrier billing connections by local authorities in a single market. Management said on a conference call that it viewed the issue as isolated and non-recurring, representing around a $4 million annualised revenue run rate.
Third, launches of several new payment connections were delayed and merchant onboarding was slower than expected.
Despite the setback, total payment volume rose about 12% to $8.3 billion in the first half, with the take rate broadly unchanged at around 80 basis points.
Deutsche Bank cut its target price to 155p from 320p but maintained its ‘buy’ recommendation, reflecting confidence that the delayed customer volumes should recover as new markets come on stream.