Paya Holdings is an integrated payment and commerce solutions provider. It helps customers accept and make payments, expedite the receipt of money, and increase operating efficiencies. Paya Health's customers span across the education, government, healthcare, non-profit, and utility sectors.
The company is among the top 20 providers of payment processing in the U.S. Paya Holdings processes over $30 billion of annual payment volume across credit and debit cards, ACH, and checks. The company went public in October 2020 through a reverse merger with the SPAC FinTech Acquisition Corporation III.
Paya Holdings and Agent 511 partnership
On Feb. 25, Paya Holdings announced that its First Billing Services and AGENT511 have entered a partnership agreement to provide customers with access to a combined product suite of First Billing’s electronic bill presentment and payment management solutions and AGENT511’s customer engagement platform.
The partnership will give AGENT511 customers access to First Billings’ electronic billing and payment solutions. Likewise, First Billing customers will be able to expand and streamline interactions with their citizens by leveraging AGENT511’s interactive communications and visualization tools. The company thinks that the partnership will facilitate frictionless revenue generation for its customers.
Steven Cohen added to his stake in Paya Holdings.
Billionaire investor and hedge fund manager Steven Cohen added to his stake in Paya Holdings during the fourth quarter, according to Point72 Asset Management’s recent 13F filing. Cohen bought 3,288,843 shares of the company during the fourth quarter, which brought his total stake to 4,489,443 shares worth $54 million.
Apart from Paya, Cohen’s fund also took a stake in Array Technologies, which is his new position. Array Technologies is a green tech company that provides tracking technology for large-scale solar energy projects. The momentum for green energy stocks has been really strong since Biden won the election. Cohen’s position in Array Technologies is worth over $19.7 million.
Cohen’s other major stake during the fourth quarter was Dicerna Pharma, which is a clinical-stage biotech company. Dicerna’s focus is on the discovery, research, and development of treatments based on its RNA interference (RNAi) technology platform. Cohen’s stake in Dicerna is worth $63.8 million and totals 2.366 million shares.
Paya Holdings' outlook
According to Market Beat, five analysts cover PAYA stock right now. All of the analysts have a buy rating on the stock, which makes it a consensus buy. The target prices for PAYA don't have a wide range. The lowest target price is $15, while the highest target price is $18. The average target price for the stock is $15.75, which implies a potential upside of nearly 30 percent.
On Feb. 26, Raymond James analyst John Davis initiated coverage on PAYA with an outperform rating and a target price of $15. On Feb. 23, DA Davidson also initiated coverage on Paya Holdings with a buy rating. Davidson analyst Peter Heckmann thinks that the company's investment story is "under-appreciated" since Paya is well-positioned to generate attractive growth in revenue and earnings over the next three years.
Paya Holdings stock is a good bet.
Paya Holdings has a strong growth outlook based on the prospects of the payment solutions market. According to Global Market Insights, the payment processing solutions market will cross $140 billion by 2026. Its growth estimates are driven by increasing demand for digital channels to perform secure and fast financial transactions.
Paya is one of the leading providers of integrated payment solutions. As a result, the company is expected to benefit from this trend. Even on a company level, Paya is expected to generate strong revenue and margin growth over the next few years. BTIG expects the company to have an adjusted EBITDA growth of over 20 percent during the next few years. The adjusted EBITDA is expected to expand to 28 percent by fiscal 2021 from 25 percent in 2019.
Both the macro and company-specific fundamentals bode well for the stock. Paya stock has shown flattish growth since it debuted on public markets in October 2020. So, it's one of the underappreciated plays that investors might like to bet on.