On Wednesday, Wolfe Research adjusted its outlook on Kaspi (NASDAQ:KSPI) shares. The firm increased the price target to $150 from the previous $140, while reiterating an Outperform rating for the company's stock.
The revision reflects Wolfe Research's confidence in Kaspi's ability to continue capturing market share and delivering double-digit growth over the medium term.
Despite some growth avenues reaching maturity, the company's diverse product offerings across its three main segments are expected to contribute to an increase in average revenue per user (ARPU) as usage scales.
Wolfe Research highlighted several secular tailwinds that could benefit Kaspi, including further penetration of eCommerce, increased utilization of B2B payments, and greater adoption of merchant financing. These elements are anticipated to support the company's growth trajectory.
Kaspi's super app ecosystem is cited as a key competitive advantage, likely to help maintain or even improve its market share in various verticals.
The firm also pointed to Kazakhstan's economic conditions as favorable for Kaspi, with inflation slowing down and interest rates declining.
Such a macroeconomic environment is seen as conducive to boosting consumer discretionary spending and enhancing the company's profitability over time.
Kaspi's focus on returning value to shareholders was also noted, with a dividend policy that historically targets a payout ratio of around 50%, but has recently been closer to 70-80%. The company currently offers an attractive annualized dividend yield of approximately 6% or more.
The raised price target of $150 is based on approximately 10-11 times Wolfe Research's diluted earnings per share (EPS) estimate for the calendar year 2025, which is projected at 6,562 Kazakhstani tenge, using a conversion rate of about 440 tenge to the US dollar.
InvestingPro Insights
Adding to Wolfe Research's positive outlook, InvestingPro data highlights Kaspi's robust financial performance with a P/E Ratio of 11.77, showcasing its attractiveness relative to near-term earnings growth. The company's PEG Ratio stands at a compelling 0.32, indicating potential undervaluation when factoring in its earnings growth prospects. Furthermore, Kaspi's impressive Revenue Growth of 46.41% over the last twelve months as of Q1 2024 underscores its strong market position and ability to scale effectively.
InvestingPro Tips suggest that Kaspi's status as a prominent player in the Consumer Finance industry and its consistent dividend payments over the past five years reinforce its reputation for reliability among investors. Additionally, the company's stock price has demonstrated a strong return over the last year, with a notable 71.13% price total return, which may intrigue those looking for growth opportunities in their portfolio.
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