Growth Focus: Pushpay Holdings Ltd (PPH)

by Patrick Taylor 04 April 2019



 
Date of Data Capture: 5/4/2019
 
Name: PUSHPAY HOLDINGS LTD (PPH)
      
Classification:Transaction & Payment Services
 
Current Price: $3.25
 
Market Capitalisation: $628M
 
Forecast Sales Growth: 44.54%
 
Yield Estimate: 0%
 
Consensus Price Target: $3.89
 
# Covering Analysts: 2
 
Discount at Current Price: 19.69%
 
Price Target Trend (3-Month): Flat-Down -12.5%
 
Signal Timeframe: Monthly-Weekly-Daily
 
TrendBias: Up-Down / Long-Medium

Indicators:
Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive

Recommendation: Buy
 
Focus: Capital Growth
 
Set up Notes:
  • PPH is expected to move into positive cash flow this year with excellent sales and earnings growth forecasts – combining well with fresh positive signalling for a continued recovery.
  • While still fairly early-stage, PPH has been growing rapidly within a strong sector – last year saw sales up over 100% and this trend is set to continue with aggressive expectations for sales, earnings and profit growth out to 2021.
  • Pricing fell back by close to 40% throughout 2018 after strong gains of almost 200% in 2017 – here we see a potential new longer-term uptrend emerging with linear resistance breaking late last year and fresh signalling coming through now, with plenty of upside resistance targets.
  • Support ($): 3.00, 2.80 & 2.60.
  • Resistance ($): 3.60, 3.80 & 4.00. 

Growth Focus: PUSHPAY HOLDINGS LTD (PPH)

The primary focus is capital gain - stocks are selected from the ASX Top 500 All Ordinaries Index.

Investing in miracles is not our normal approach – but here we hope to put ourselves in touch with a profit through Pushpay Ltd as the charitable payments provider shows fresh strength and attractive forecasting.
Starting out in the US in 2015 PPH listed onto the ASX in late-2016 and provides specialised mobile commerce and electronic payment solutions to the non-profit, religious and charitable donation market. While still reasonably early-stage the company is growing fast and showing strong gains in key performance areas, while increasing customer revenue and process volumes.
Performance-wise, most of the growth has been seen in sales and customer wins, with the average revenue generated by each customer (per month) increasing by 34.2% over the last year, while sales more than doubled in the same period. Company revenue climbed by almost 50% in the 6-months ending 2018, and in a significant milestone the company became cash-flow positive for the first time in January 2019.
With the first move into real profitability this year we are relying on forecasting to carry some of this recommendation and here we find a favourable analyst outlook for continued aggressive growth in sales expected out to 2021. Importantly we see earnings are set to continue higher, in-step with sales, after the initial surge this year, with EPS seen jumping forward on expanding revenue, profits and stronger margins.
The early-stage aspect of this investment leaves valuations with a volatile track record, but even with consensus target pricing falling by nearly 30% over the last year, there remains a discount to the aggregate valuation by almost 20%, though coverage is thin.
Pricing shows a clear cyclical progression from the 250% rally between early-2017 and mid-2018, being followed by the 30% falls through to late-2018. Earlier this year we saw price bouncing off support near $3 before breaking through linear resistance and rallying hard into a short-term volatility spike before returning to base, which is where we now find them.
Here we see fresh positive indications for a potential new longer-term uptrend forming up and holding good correlation, with shorter-term momentum in support. With an excellent technical outlook combining well with an aggressive fundamental growth forecast we think Pushpay offers an enlightened investment opportunity.

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.
 

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