On Friday, Stephens reaffirmed its positive stance on Upbound Group (NASDAQ:UPBD), maintaining an Overweight rating and a $38.00 price target. The move comes in response to Upbound's recent announcement of its acquisition of Brigit, a financial health technology company. The deal, valued at $460 million, is expected to contribute between $70 million and $80 million to Upbound's EBITDA by 2026.
The acquisition price includes $325 million payable upon closing, with 75% in cash and 25% in Upbound shares. Upbound plans to finance the purchase through its existing credit facilities, in addition to issuing new shares. Brigit, established in 2019, operates a subscription service that leverages artificial intelligence to assist consumers in improving their financial well-being.
Brigit's current financial trajectory indicates that by 2025, the company is expected to generate revenues in the range of $215 million to $230 million, with an adjusted EBITDA forecasted to be between $25 million and $30 million. The company has also demonstrated significant user growth, boasting approximately 2 million active users, which marks an increase of more than 300% since 2021.
The strategic acquisition by Upbound Group is designed to fuel growth and diversification for the company. The integration of Brigit's financial health technology into Upbound's offerings is anticipated to enhance the overall value proposition for Upbound's customers. With the financials of the deal disclosed, the market will be watching closely to see how this acquisition impacts Upbound's performance in the coming years.
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