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Remitly Global (NASDAQ:RELY) stock retreated 3.2% in Friday afternoon trading after Wolfe Research downgraded the provider of digital financial services to Peer Perform from Outperform over concerns about its profitability and valuation.
The company’s third-quarter earnings, published early November, reflected “EBITDA results and 4Q profit guidance (that) took a step back,” analyst Darrin Peller wrote in a note.
What’s more, “net customer adds below alt. data (app download) implications and an incrementally lower take rate in 3Q opened the door to further competitive questions related to churn and pricing power,” he added.
In all, amid an uncertain macroeconomic environment, the sell-side analyst sees a “lack of profitability” that is therefore hard to establish valuation support.
Year-to-date, Remitly (RELY) shares surged over 98%, as investors began to appreciate its rapid customer growth & top-line performance” in the first half of 2023, the note said.
Peller’s Peer Perform rate aligns with the SA Quant system rating of Hold and disagrees with the average Wall Street analyst rating of Strong Buy.