Shares of prepaid card processing service provider Paysign (PAYS - Get Report) were falling sharply Monday after analysts at BTIG downgraded the stock to neutral Monday on concerns about the company's current valuation.
The firm also removed its $12 price target on the stock, which opened Monday's session above $12 per share but at last check was trading at $11.43, down 10.04%.
"While we continue to believe PAYS is well positioned to sustain a high revenue growth rate and strong adjusted EBITDA margins, the stock has appreciated by almost 261% YTD and trades at 29x FY20E EV/EBITDA. We view that valuation as a fair reflection of PAYS' visible growth prospects; as such, we are moving to the sidelines until either new avenues for growth emerge (potentially via acquisition) or a pullback in its share price creates a better entry point," wrote analyst Mark Palmer.
Palmer noted that investors have driven up the stock in rightful anticipation of its 50% annual revenue growth ambitions for its prepaid debit card operations over the next two years.
"However, we would need to see PAYS successfully execute the Paysign Premiere launch and demonstrate that the polling data regarding the card was truly indicative of plasma donor cardholders' appetite for it before we could adjust our models to reflect the prospects for a meaningful uplift in the company's operating performance," Palmer said.