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BILL Holdings (NYSE:BILL) stock dipped 3% in Monday premarket trading after Wells Fargo downgraded the provider of financial automation software to Underweight from Equal Weight as analyst Andrew Bauch pointed to a growing number of risks and uncertainties.
Among some of the notable issues cited by Bauch include: “(1) added take rate questions post V/MA settlement, (2) the potential to expand the BofA relationship to the ‘back-book’ becoming increasingly unlikely, and (3) an underwhelming return from the November RIF which we perceive as a sign of limited operating leverage.”
Bauch, in turn, added BILL to Wells Fargo’s Q2 2024 tactical ideas list.
In all, he believes Wall Street estimates for future revenue growth is too aggressive, according to a note written to clients, as management’s attempts to reignite take rate expansion lack compelling evidence of success.
His Underweight rating diverges from the SA Quant system rating of Hold and the average sell-side analyst rating of Buy.