Paysign Inc.

Paysign Inc. (NASDAQ: PAYS) is a vertically integrated prepaid card and processing services provider for business, consumer, and government applications. The company offers a card processing platform that consists of technologies and software applications that are tailored to the demands of its customers.

Key Financial Highlights

• Revenues grew by USD 1.9 million (31%), compared to the same period last year. The influence of the following reasons prompted the change:
• Plasma income grew by USD 2.0 million (37%), owing to an increase in plasma donations and cash deposited onto cards.
• Pharma revenue fell by USD 76 thousand (-9%), owing to the cancellation of four pharma prepaid contracts in 2021 and the recognition of settlement money from one of those programs in Q1 2021.
• Cost of revenues decreased by USD 225 thousand (-7%), while the drop in cost of sales was mostly attributable to the renewal and restructuring of an agreement in the first quarter of 2022 but was partially offset by an increase in variable transaction costs owing to more plasma transactions throughout the period.
• The rise in plasma sales and profitability contributed to a USD 2.2 million (77 percent) increase in gross profit. Our gross profit margin increased to 60.8 percent this quarter.
• For the quarters ended March 31, 2022, and 2021, respectively, the net loss dropped from USD 1.3 million to USD 309 thousand, while the effective tax rate was (0.6%) and (0.1%).
• Unrestricted cash increased by USD 1.1 million to USD 8.5 million, owing to the company's plasma business improving on our operations.
• PAYS's full-year projection for 2022 remains unchanged, with total revenue expected to be in the range of USD 35.25 million to USD 38.35 million, indicating growth of 20% to 30%, with plasma accounting for over 90% of total revenue. Over 2021's adjusted EBITDA of USD 2.0 million, adjusted EBITDA is predicted to more than double to USD 4.0 million.

Stock recommendation

PAYS's stock price has corrected by 39.62% in the past nine months and is currently in the middle of its 52-week range of USD 2.81 to USD 11.45.  As can be seen in the chart below, the price is currently between the short-term (50-day) SMA and long-term (200-day) SMA. The price did form a bullish divergence on the daily chart after which has shown a strong upward movement (approx. 38.67%), with further chances of continuation of this momentum once the price breaks the long-term SMA as well.

Given the stock's considerable correction in the past nine months, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 1.78 as of June 09, 2022, with further analysis when the price breaks the long-term SMA.

One Year Technical Chart, as of June 09, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Entry price as of June 09, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.

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