US Edition Optimal Payments
408½p+1¾
Questor says HOLD
AIM-listed online money transfer platform Optimal Payments said yesterday that it expects full-year sales and profits to beat market expectations due to a strong second-half performance, leading to a round of broker upgrades.
The company expects revenue for the full year ended December 2013 will not be less than $245m (£149m), growth of 37pc on the year before, and earnings before interest, tax, depreciation and amortisation (Ebitda) will not be less than $51.5m, representing growth of about 87pc during the year.
Analysts from broker Canaccord Genuity increased Ebitda forecasts for 2014 by 6pc to $60.1m, and by 5pc to $70m for the next year.
An increasing amount of shopping and banking is being done online and through mobile devices these days. Optimal Payments helps customers use credit cards, debit cards and direct debits online by processing them through a technology system designed and managed by the company.
Joel Leonoff, chief executive, said 2013 had been an “exceptional year” with “substantial growth” in revenue. However, there could be more to come; the recent liberalisation of the US online gambling market has opened up new opportunities over the next two years.
The company has two main sources of revenue: NETELLER, an “e-wallet” business into which online gamblers can deposit money before playing games, and NETBANX, a system that processes transactions for online retailers. Both performed strongly, growing by double digits during the second half of last year.
The big opportunity is in US online gambling. New Jersey, Delaware and Nevada all legalised online poker and casino games this year and, as companies obtain licences in these states, the market for the NETELLER product should grow rapidly.
Optimal Payments also announced a partnership agreement with both MasterCard Europe and Visa Europe that should further accelerate growth.
Questor highlighted the shares as one to watch last year (250p, September 18) and they have since soared 64pc. There is still risk in this Aim-listed stock as it is exposed to sudden regulatory changes in the US and more than a third of revenue comes from one client, so we retain our hold recommendation.