Paysafe Rises; KeyBanc Lauds Two-Sided iGaming Payment Strategy

Payment processor Paysafe has an opportunity as the U.S. iGaming industry expands, KeyBanc said, initiating coverage at outperform.
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Paysafe  (PSFE) - Get Report shares were higher on Monday after RBC analysts initiated coverage of the payment processor with an outperform rating and $19 price target. 

At last check Paysafe shares were up 3.2% to $13.93. The target indicates 41% potential upside from the stock's Friday closing price at $13.50. 

The company went public at the end of March in a special-purpose-acquisition, or blank-check, deal with Foley Trasimene Acquisition.

The London company offers a "unique combination" of digital-wallet capabilities and cash-conversion services for consumers who would normally be left out of the economic loop, analyst Daniel Perlin says.

"PSFE has created a unique two-sided network enabling merchants to accept online and in-store payments (in specific niche verticals), while also offering consumers a digital wallet and eCash solution, which converts cash-heavy users to digital users," Perlin said. 

The combination "enables PSFE to generate superior take rate economics vs. peers."

Read More: Paysafe Goes Public Through SPAC Merger With Foley Trasimene

The investment firm says Paysafe has a track record of success supporting the iGaming industry since it came online in Europe in 1999. 

The nascent U.S. iGaming market represents a large growth opportunity for the company, Perlin writes. 

Currently, Paysafe operates in 14 states with connections to 34 operators representing more than 75% of the U.S. market. 

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Paysafe shares are down 11% year to date. That compares with the S&P 500, which is up 11%, and KeyBanc's sector coverage universe, which has seen a 10% uptick in 2021. 

"[This] recent underperformance is largely due to the complex nature of PSFE’s business and the FTAC II transaction," Perlin said. 

"[But] once the company reports first-quarter 2021 results (later in May) we anticipate investors will gain a better appreciation and understanding of its growth opportunities and unique position within the payment industry."  

This is the second time Paysafe is public, Barron’s reported. The company traded on the London Stock Exchange until 2017, when the New York private-equity firms Blackstone BX and CVC took the company private.