Leap of faith: Analyst sees Pushpay going higher. A lot higher

Image / Pushpay

In September, with its shares up 120 per cent for the year, the Herald highlighted Pushpay as one of the NZX's top performers.

Now it's up 170 per cent, after today's 5.57 per cent lift (by midday trading) to $9.29, for a market cap of $2.56 billion.

How much longer will the bull run last? A lot longer, according to ForsythBarr analyst Jamie Foulkes, which has just raised his 12-month target from $13.05 to $13.86.

Foulkes' core rationale remains the same: With Covid lockdowns, the big US churches that account for most of Pushpay's revenue are adopting more digital solutions - chiefly, Pushpay's digital giving and church management software.

But after digesting new information, including "proprietary feedback from over 25 US churches indicates that average total giving for 2020 year-to-date ranges between +3 per cent to +19 per cent vs the prior year," the Forbarr analyst has upped his guidance for Pushpay's FY2021 operating earnings to US$60.8m - ahead of the analyst consensus US$55.1m, and Pushpay's official guidance which, after already been nudged up a couple of times sits at US$50m-$54m.

Foulkes describes his ebitda punt as being based on a "conservative" estimate of Pushpay's pandemic-era growth.

He expects the company to raise its guidance, again, when it reports its half-year result tomorrow.

PUSHPAY

Foulkes sees a long-term bump in Pushpay's fortunes, based on research that shows "digital penetration" of US churches has jumped from 65 per cent to 80 per cent over the past year amid Covid.

The Forbarr analyst does not see a dividend in any of his forecasts, which run through to 2023.

That puts him at odds with Jarden analysts Wassim Kisirwani and Wilson Wong, who see a profit payout from FY2022, initially at a modest 0.9 per cent yield. The Jarden pair have a $9.30 12-month price target.

Craigs IP analyst Stephen Ridgewell is picking that Pushpay will have the financial wherewithal to pay a dividend in FY2021, but that the company will choose to reinvest profits for growth instead.

Ridgewell calls Pushpay's official guidance "conservative" and is picking operating earnings of $57m for FY2021.

Pushpay

Tomorrow could also see an update on Pushpay's hunt for a new chief executive.

Bruce Gordon - a former chairman of the company drafted in as CEO after the departure of co-founder Chris Heaslip in mid-2019 - announced his intention to step down at the company's July annual meeting.