Tyro Payments' first half revenues were up 9% year on year, ahead of consensus, and earnings were up 40%, missing consensus, Morgan Stanley notes.

The broker views Tyro as a cyclical as well as structural story, and the results, and lowered second half outlook, confirm a period of
weaker turnover and total transaction value ahead.

But Tyro continues to focus on improving efficiency, which is pushing earnings and cash flow higher, notwithstanding cyclical headwinds.

The key debate, Morgan Stanley suggests, is what is the sustainable earnings margin for Tyro, as a relatively small player (5% market share) operating in the very competitive terminals/payments space in Australia?

Equal-weight retained. Target falls to $1.30 from $1.60. Industry view: Attractive.

Sector: Software & Services.

Target price is $1.30.Current Price is $1.03. Difference: $0.27 - (brackets indicate current price is over target). If TYR meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2024 Acquisdata Pty Ltd., source FN Arena