Canaccord Genuity initiates coverage on Bango at 'buy'
By Iain Gilbert
Date: Monday 20 Jan 2025
(Sharecast News) - Analysts at Canaccord Genuity initiated coverage on sales and marketing technology group Bango with a 'buy' rating and a 244.0p per share target price on Monday.
Canaccord Genuity stated Bango was primed to exit a busy two-year period with its DCB business potentially worth more than the company's market cap and a "fast-growing platform business" with SaaS-like licensing, first-mover advantage and a roughly $100.0m annual recurring revenue opportunity.
"Bango's heritage is in alternative payments, with the group currently deriving the majority of revenues from direct carrier billing. DCB is popular in mobile-first markets (e.g. Japan, South Korea) and countries where card payment penetration is low as it allows consumers to pay using their mobile phone bill," said the Canaccord.
The Canadian bank also noted that the acquisition of rival DOCOMO Digital in 2022 had scaled the network but also added roughly $21.0m of excess integration costs that have distorted Bango's profit and loss story. However, with the synergies now largely complete, Canaccord reckons "a high-margin, highly cash-generative DCB business" could emerge with approximately 50% or more EBITDA margins, which it estimates to be worth more than Bango's current market cap.
"We believe Bango is primed to exit a period of integration/investment with double-digit organic revenue growth and strong margin, EPS and FCF recoveries expected," concluded Canaccord.
Reporting by Iain Gilbert at Sharecast.com
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