Paysign Inc

Paysign Inc (NASDAQ-CM: PAYS) is a support services Company offering payment solutions. The Company provides processing services and prepaid card programs.

Investment Highlights - Paysign Inc – Speculative Buy at USD 4.79

• Despite the weak financial performance in the third quarter, the Company remained well-positioned and expects financial performance to improve in the Q4 FY2020.
• As per valuation metrics, EV/Sales, Price/Cash Flow and Price/Book Value multiples of the Paysign Inc are currently lower as compared to the corresponding multiple of the Professional & Commercial Services industry. It reflects, shares are undervalued as compared to the industry.
• In the last three months, the Company delivered a decent return of ~3.23% and delivered higher returns compared to the benchmark Index.
• From the technical standpoint, 14-day RSI is supporting an upside move (around 48 level), which means the stock price could increase in the short term.

Key Risks

• COVID-19 is having a profound impact on all countries in which the Company operates.
• The Company’s operations will remain impacted due to uncertain political and economic climate for short to medium term.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 17 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter of the financial year 2020, due to negative revenue by pharma industry business, the total revenue declined significantly, and the Company reported negative revenue. The total revenue also declined for nine months period as well.
• The profitability margins for Q3 and 9M FY2020 declined, reflecting higher operating expenses incurred.
• The cash balance as on 30 September 2020 declined to $7,497,579 (31 December 2019: $9,663,746).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has reported a decline in financial performance in the third quarter and nine months period of the financial year 2020. Both the top-line and the bottom-line performance declined. PAYS reported negative revenue in the third quarter. The covid-19 pandemic has an adverse impact on plasma industries, while the Company remained optimistic towards recovery and expects to deliver growth on a year-over-year basis. Paysign is well-positioned and capitalized to tackle the impact of the pandemic. The Company expects financial performance in the fourth quarter to improve based on the introduction of new client programs and the easing of government restrictions. The stock made a 52-week low and high of USD 3.63 and USD 10.98, respectively.

Based on the decent growth prospects and optimism towards a decent recovery in the fourth quarter, we have given a “Speculative Buy” recommendation on Paysign Inc at the closing price of USD 4.79 (as on 19 January 2021).

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