The S&P/TSX Capped Information Technology Index was down 2.22% in early afternoon trading on June 21. Today, I want to look at one of the top tech stocks on the TSX: Nuvei (TSX: NVEI). This Montreal-based company provides payment technology solutions to merchants and partners in North America, Europe, and around the world. This tech stock started well but has since lost momentum in the late spring and early summer. Is Nuvei worth buying today? Let’s jump in.
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How has Nuvei stock performed so far in 2023?
Shares of Nuvei have plunged 19% month over month at the time of this writing. The stock is still up 1.8% so far in 2023. Meanwhile, its shares are now down 28% in the year-over-year period. Investors can see more of its recent performance with the interactive price chart below.
Here’s why investors should seek exposure to this industry
Investors should be hungry for exposure to the payment technology solutions space. Grand View Research recently valued the global payment processing solutions market at US$47.6 billion in 2022. This report forecast that this market would achieve a compound annual growth rate (CAGR) of 14% from 2023 through to 2030. The market researcher stated that the increased penetration of the internet and smartphones around the globe had boosted the growth of payment technology solutions.
Fortune Market Insights estimated that this market was valued at US$90.4 billion in 2022. The report projects that this market will rise to US$231 billion by 2032. This would represent a CAGR of 9.9% over the projected period.
Should you be pleased with Nuvei’s recent earnings?
This company released its first-quarter fiscal 2023 earnings on May 10. Total volume increased 45% year over year to $42.4 billion, while Nuvei posted revenue growth of 20% to $256 million. Nuvei posted very strong growth in Latin America in comparison to more modest results across the rest of its international operations.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $96.3 million compared to $91.6 million in the first quarter of fiscal 2022. Nuvei increased the amount of alternative payment methods (APMs) in its portfolio to 615 at the end of this most recent quarter. This will allow its customer base to accept more forms of digital payment methods.
Looking forward, Nuvei is projecting total volume in the range of $50 million to $52 million in the second quarter of fiscal 2023. It is forecasting total volume between $196 million and $202 million for the full year. Moreover, it is projecting total revenue between $1.22 billion and $1.26 billion and adjusted EBITDA between $456 million and $477 million for fiscal 2023. It has maintained growth targets for revenue at 20% or more and is targeting an adjusted EBITDA margin over 50% over the long haul.
Why I’m buying Nuvei stock right now
The Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Nuvei last had an RSI of 19, which puts this tech stock well in technically oversold territory. It is on track for strong earnings growth going forward.
