On Friday, Needham maintained a Buy rating on MoneyLion Inc. (NYSE: ML) shares and increased the price target to $100 from $70. The financial technology company's third-quarter results showcased revenue that aligned with Wall Street expectations and an EBITDA that exceeded consensus.
The analyst highlighted the company's guidance for the fourth quarter, which surpassed expectations, attributing this to the growing strength of MoneyLion's enterprise business—a key component of the company's long-term investment thesis.
The adjustment in the price target follows MoneyLion's reported rally in share price after the third-quarter results were disclosed. Despite this rally, the analyst noted that MoneyLion's shares are still trading at a discounted valuation compared to its peers, with an approximate 6.7 times enterprise value to FY25 EBITDA ratio. This valuation, coupled with MoneyLion's robust growth and healthy margins, supports the analyst's bullish stance on the stock.
Needham's positive outlook for MoneyLion is also reflected in the firm's decision to keep the company on the Needham Conviction List. The analyst's comments suggest confidence in MoneyLion's performance and potential, emphasizing the attractiveness of the stock for small-cap growth investors.
The raised price target to $100 indicates a significant upside from the previous target of $70, reflecting the firm's belief in MoneyLion's continued growth trajectory. The company's strong third-quarter performance and promising fourth-quarter guidance have contributed to Needham's optimism regarding MoneyLion's future financial success.
In other recent news, financial technology firm MoneyLion reported a record Q3 revenue of $135 million, indicating a 23% increase from the previous year. This robust performance led to an upward revision of its full-year revenue guidance to a range of $536 million to $541 million.
The company also marked a record adjusted EBITDA of $24 million, reflecting an 18% margin. These strong results are credited to significant customer growth, with the total reaching 18.7 million, and the expansion of its enterprise segment.
MoneyLion also launched MoneyLion Checkout to enhance conversion rates for enterprise partners, showing positive early indicators, including a 25% improvement in click-through rates. However, the company reported one-time legal expenses totaling $8 million, which affected EBITDA adjustments. Despite its record performance, the company did not provide specific updates for October's performance.
While the firm anticipates continued growth in consumer and enterprise revenue streams, it also plans to invest in brand marketing to enhance direct-to-consumer offerings. These recent developments highlight the company's strategic initiatives, including the expansion into new financial verticals such as auto loans and insurance, positioning it well for continued growth in the evolving financial services landscape.
InvestingPro Insights
MoneyLion's recent performance aligns with several key metrics and insights from InvestingPro. The company's revenue growth of 23.4% over the last twelve months as of Q3 2024 supports Needham's positive outlook on the company's growth trajectory. This growth is further emphasized by the impressive 1347.73% EBITDA growth over the same period, indicating significant improvement in operational efficiency.
InvestingPro Tips highlight that MoneyLion has shown a "significant return over the last week" and a "strong return over the last month," with data showing a 62.08% 1-week price total return and a 72.28% 1-month price total return as of the latest data. These figures align with the rally in share price mentioned in the analyst report following the third-quarter results.
Despite the recent price surge, MoneyLion's P/E ratio (adjusted) of 87.6 suggests the stock is "trading at a high earnings multiple." This valuation metric, combined with the analyst's observation of MoneyLion trading at a discount compared to peers, presents an interesting dynamic for investors to consider.
For readers interested in a deeper analysis, InvestingPro offers 14 additional tips for MoneyLion, providing a comprehensive view of the company's financial health and market position.
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