Analysts are optimistic about financial technology stocks' prospects, with 65 of 96 fintech companies trading below analysts' mean one-year price targets as of the end of August.
Ten of those companies are expected to see shares rise at least 20% to hit analysts' targets, according to an S&P Global Market Intelligence analysis.
But no stock has a higher implied upside, or the amount a stock needs to rise to hit analysts' average price target, than the banking technology company Mitek Systems Inc. Its shares have an implied upside of 89.7%.
The company has been beset by high-level management shakeups and cuts to earnings guidance, but analysts have kept their price targets largely intact, and a majority of analysts still rate the stock a "buy." In late July, Mitek's shares lost nearly 16% after the company lowered its non-GAAP profit margin guidance. Shares then fell more than 15% on Aug. 28 after Mitek announced that Chairman and CEO James DeBello would be leaving the company at the beginning of 2019 and that CFO Jeff Davison would resign at the end of November.
On the other hand, 31 fintech companies are trading above their mean one-year price targets, implying that analysts expect the shares to fall. After more than doubling in price over the last year, Paycom Software Inc.'s stock is trading 20.1% above its mean one-year price target, the largest overshoot in the analysis.
Similarly, Square Inc.'s 251.9% return over the last 12 months has led the stock to outpace analysts' one-year price targets by 19.6%.
In this analysis, S&P Global Market Intelligence examined U.S. financial technology companies trading on major exchanges in relation to their mean one-year analyst price targets as of Aug. 31. Only stocks with three or more analyst price targets, and that were trading above $5 per share, were included in this analysis.
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