On Thursday, BMO (TSX:BMO) Capital adjusted its outlook on AvidXchange Holdings (NASDAQ:AVDX), a provider of accounts payable automation software and payment solutions, by increasing the price target to $13.00, up from the previous $11.00. The firm maintained its Market Perform rating on the stock.
The revision follows AvidXchange's fourth-quarter earnings, which surpassed expectations and prompted BMO Capital to revise its EBITDA forecasts upward by 13-16%. The analyst highlighted the company's EBITDA guidance for 2024, which notably exceeded the expectations of Wall Street, driven by a stronger-than-anticipated core transaction yield improvement and efficiency gains during the fourth quarter.
AvidXchange's revenue growth, excluding contributions from float and political revenue, is anticipated to pick up pace in 2024. The analyst suggested that there could be further upside to the company's initial guidance, based on the recent performance.
BMO Capital now considers AvidXchange as one of its preferred stocks with a Market Perform rating. Nevertheless, for investors in small to mid-cap (SMID-cap) stocks, the firm sees slightly greater relative value in other companies with Outperform ratings, such as NVEI and RELY, indicating alternative investment opportunities within the sector.
InvestingPro Insights
Following BMO Capital's recent price target adjustment for AvidXchange Holdings (NASDAQ:AVDX), the InvestingPro platform offers additional insights that could be valuable for investors. With a focus on the company's financial health and market performance, here are some curated metrics and tips:
InvestingPro data shows an impressive 20.76% quarterly revenue growth in Q4 2023, which aligns with the positive outlook presented by BMO Capital. This growth is a testament to the company's expanding reach in the accounts payable automation software market. Furthermore, AvidXchange's gross profit margin stands at a robust 68.14% for the last twelve months as of Q4 2023, reflecting the company's ability to maintain profitability in its operations.
Investors may also be interested in the company's stock performance, which has seen a strong 18.93% total return over the last three months. This is indicative of the market's positive reception to AvidXchange's strategic initiatives and earnings results.
For those considering an investment in AvidXchange, the InvestingPro Tips highlight that analysts predict the company will be profitable this year, despite not being profitable over the last twelve months. Additionally, AvidXchange does not pay a dividend to shareholders, which might be a consideration for income-focused investors. For more in-depth analysis and additional tips, including net income growth expectations and strong recent returns, investors can explore the comprehensive list of 6 InvestingPro Tips available at https://www.investing.com/pro/AVDX.
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