On Wednesday, BTIG initiated coverage on AvidXChange Holdings (NASDAQ:AVDX), a leading company in the middle-market business-to-business (B2B) invoice and payments sector with a market capitalization of $2.38 billion. The firm has given the stock a Buy rating with a price target of $14.00, aligning with the broader analyst target range of $9-15. According to InvestingPro data, the stock currently trades at $11.11, with analysts maintaining a moderately bullish consensus.
The coverage resumption by BTIG points to AvidXChange's strong positioning within its market niche, which is expected to contribute to a sustainable growth pattern in the coming years. The company has demonstrated solid performance with revenue growth of 17.84% and an impressive gross profit margin of 71.46%. While the analyst acknowledges the current growth is below its medium-term target of over 20%, they believe AvidXChange has established a significant competitive edge in the middle-market verticals it serves. These markets are just beginning to transition their invoicing and payment processes to digital and automated solutions, offering a substantial growth opportunity for the company.
BTIG takes a cautious stance on their fiscal year 2025 and 2026 estimates, projecting approximately 12% core growth. Nonetheless, they suggest there is potential for AvidXChange to surpass these expectations. This optimism is based on possible increased revenue from the monetization of payment services to software-only customers, the introduction of new value-added services, and overcoming recent macroeconomic pressures that have affected the company's core markets.
The analyst's note includes an assessment of both positive and negative perspectives on AvidXChange's prospects. They elaborate on why the company is well-situated in a vast and appealing market, and they conclude with a recommendation for investors to take a long position on the stock. InvestingPro analysis reveals that while the company isn't currently profitable, analysts expect it to achieve profitability this year, with 4 analysts recently revising their earnings estimates upward.
For deeper insights into AVDX's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, AvidXChange Holdings has seen a series of positive developments. The company reported a 14% year-over-year revenue increase in the third quarter, reaching $113 million, and improved gross margins to 74.5%.
AvidXChange also initiated a $100 million share repurchase program. Compass Point upgraded AvidXChange's stock rating from Neutral to Buy, raising the price target to $15.00 from the previous $8.00. Meanwhile, BMO (TSX:BMO) Capital Markets, Piper Sandler, and JPMorgan (NYSE:JPM) all maintained a neutral rating on the company, with each firm raising the price target following strong Q3 results.
Furthermore, AvidXChange has continued to expand through strategic partnerships, particularly in the healthcare sector and with regional banks. The company's 2024 revenue forecast is between $437 million and $439 million, with an adjusted EBITDA projection of $78 million to $79 million. Despite potential challenges from political uncertainty and interest rate changes, AvidXChange targets 50% to 55% growth for 2025.
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