Bill.com stock gains after bullish analyst call

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Shares of Bill.com Holdings Inc. are up more than 6% in Friday trading after Wolfe Research analyst Darrin Peller initiated coverage of the stock with an outperform rating and $170 price target. “The digitization of B2B [business-to-businsss] payments continues to be among the most underpenetrated and misunderstood opportunities in fintech,” he wrote. “As one of the only public pure-plays on this theme, BILL is a rare asset, considering most leading B2B payment companies are either private or bundled within larger firms.” Peller said that while Bill.com is a “great company” in his view, the case for its stock is “more nuanced” given that the shares are trading at more than 50 times consensus revenue estimates for the next 12 months. Still, he sees reason for optimism. “The magnitude of revenue growth potential in the medium-term vs consensus skews the risk/reward dramatically upward,” Peller wrote. “While our base case calls for revenues to beat consensus by ~10% and ~15% in the next two fiscal years, respectively; we outline a path to 40% and 60%+ beats, with even greater potential in the out year(s).” Bill.com shares have climbed more than 230% so far this year as the S&P 500 has risen 14%.
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