UPDATE: Loop Capital Starts Expensify Inc (EXFY) at Buy

(Updated - December 6, 2021 4:12 AM EST)

Loop Capital analyst Yun Kim initiates coverage on Expensify Inc (NASDAQ: EXFY) with a Buy rating and a price target of $45.00.

The analyst comments "We are initiating coverage of Expensify with a Buy rating and $45 PT. In our view, the company’s unique, bottom-up, freemium-based customer acquisition model and highly efficient customer support operations provide the foundation for building a successful software business targeting SMBs (small and medium-sized businesses), which has historically been difficult to achieve for software companies. This significant cost efficiency also serves as key competitive differentiators that are difficult to duplicate. We expect the company to leverage its unique, viral network-driven go-to-market to continue to successfully penetrate the SMB market, which is estimated to be more than double the size of the enterprise market (businesses with 1,000+ employees) and commands ARPU (average revenue per user) that is at least 2x that of the enterprise market. With the business T&E (travel and expense) activity beginning to rebound, we believe EXFY is at the cusp of accelerating its growth and further distancing itself from the competition using its significant cost advantage and increasing economies of scale. Ultimately, the company plans to leverage its expense management foothold as the beachhead into becoming a back-office platform company providing payroll, invoicing, corporate card, travel and other services involving financial transactions. Overall, we believe the company’s growth and margin profile that has the potential to deliver 30%+ revenue growth and 30% EBITDA margin, even during the current investment period, to be highly unique among the hypergrowth stories in software. Our DCF-derived $45 PT implies 32% FCF CAGR over the next five years (FY21-FY26) when this year’s one-time employee bonus is excluded. We believe this implied 32% FCF CAGR is reasonable given its current Rule of 60 profile."

For an analyst ratings summary and ratings history on Expensify Inc click here. For more ratings news on Expensify Inc click here.

Shares of Expensify Inc closed at $35.80 yesterday.

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