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Bill.com Jumps as Analysts Laud Quarter, Proposed Divvy Deal

Analysts at Oppenheimer, Piper Sandler and KeyBanc issued bullish notes on Bill.com.
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Shares of Bill.com  (BILL) - Get Report were higher Friday after analysts lauded the fiscal-third-quarter report from the provider of financial-services software for small and medium-size businesses and its plan to acquire a complementary company.

At last check Bill.com shares were trading up 14% at $148.32.

Oppenheimer analysts reiterated an outperform rating and $175 price target on the Palo Alto, Calif., company. 

"Bill.com continues to deliver strong execution, and the fiscal-fourth-quarter guidance implies sustained 50%-plus growth," analyst Brian Schwartz wrote.

"The Divvy deal is positive for Bill.com's future, and we think demonstrates the willingness by management to expand the company's total addressable market through close adjacent opportunities, even as the core business keeps producing fast software-as-a-service growth." 

Analysts at Piper Sandler affirmed an overweight rating and raised their price target to $180 a share from $170. 

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"We expect the $2.5 billion acquisition of Divvy could likely overshadow a really strong quarter," analyst Brent Bracelin said. "This acquisition appears transformative with potential to more than double transactional revenue for BILL on day one.

"Based on a $100 million annual recurring revenue model generated across 7,500 active small and medium-size business customers and just $4 billion of [gross merchandise volume], we see 10 times expansion potential for Divvy to exceed $1 billion of annual recurring revenue over the next 4 to 6 years." 

Analysts at KeyBanc maintained their overweight rating while raising their price target to $175 a share from $165. 

"We see accounting and ancillary software systems as a critical element of the business-to-business value chain and one that could see increased interest during and in the wake of COVID-19," analyst Josh Beck wrote.

"Bill.com has a significant small and medium-size business moat due to a strong [product-market fit] honed over years of product development, unique accounting/FI partnerships, and sizable network effects via an ecosystem of buyers and suppliers (about 2 million)." 

Bill.com shares were rising 16.2% to $151.43 in early trading Friday.