Canaccord sees huge upside at CAB Payments

Canaccord Genuity expects shares of CAB Payments to more than double from current levels, as it kicked off coverage of the stock with a ‘buy’ rating.

The financial profile of the B2B cross-border payments and foreign exchange solutions provider is “very attractive”, Canccord said in a research report on Wednesday.

“Over its 100+ year operating history, the group has established an extensive proprietary network of direct payment rails to emerging markets, which is a powerful competitive moat,” the broker said.

In terms of stock’s current valuation, Canaccord said, when comparing CAB to 16 other global and UK-listed FX and payments companies, the stock should be rated much higher than it is at the moment.

“Using a combination of EV/EBITDA and PE multiples for this group, and a focus on 2023 [calendar year] forecasts, the implied valuation range for CABP is £1.3bn-£1.7bn.

“Importantly, we note this range is based purely on peer group averages and excludes any premium valuation that might be attributed to CABP due to its superior historic and forecast returns. We take the midpoint of the range (£1.5bn) to derive our 585p target price.”

The stock was up 2% at 255p on Wednesday afternoon.