Down 22% in 3 weeks, is the Pushpay (ASX:PPH) share price a buy?

The Pushpay Holdings Ltd (ASX:PPH) share price dropped 22% in just 3 weeks, is it a buy? It’s still aiming for big growth targets in the coming years.
The post Down 22% in 3 weeks, is the Pushpay (ASX:PPH) share price a buy? appeared first on Motley Fool Australia. –

man holding mobile phone that says make donation

Is the Pushpay Holdings Ltd (ASX: PPH) share price a buy after falling 22% in just three weeks?

Pushpay is an electronic donation business that facilitates digital giving, mainly for clients like large and medium US churches.

Why has the Pushpay share price fallen?

Pushpay saw its shares rise by 235% between 16 March 2020 and 28 October 2020. The company is involved in helping US churches remain connected with their congregations. Not only does Pushpay’s technology help churches receive donations in a socially distanced world, but it also provides livestreaming capabilities.

The Pushpay share price dropped after the US election and it has dropped 13% since the news of the 90% effectiveness of the BioNTech – Pfizer vaccine.

Indeed, many of the ASX tech shares focused on digital services have seen falls. Other examples include Temple & Webster Group Ltd (ASX: TPW) and Ltd (ASX: KGN).

The Motley Fool’s Pro service speculated that the market may not have appreciated the company saying that its strong cash and cashflow position may help consider other acquisition opportunities. Another reason for the selloff could have been because of board changes and share sales.

What growth has Pushpay been reporting recently?

Pushpay recently released its FY21 half-year result. It reported that its operating revenue increased by 53% to US$85.6 million. This was driven by total processing volume growth of 48% to US$3.2 billion. Pushpay said it expects continued revenue growth as it executes on its strategy, improves efficiencies and increases its market share.

It said that its gross profit margin rose from 65% to 68%. Not only that, but as a percentage of operative revenue, total operating expenses improved by 12 percentage points from 50% to 38%.

The combination of fast revenue growth and slower expense growth saw earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) rose by 177% to US$26.7 million. The EBITDAF margin increased by 14 percentage points, up from 17% at 30 September 2019 to 31% at 30 September 2020.

Pushpay’s net profit after tax (NPAT) grew by 107% to US$13.4 million and operating cash flow improved by 203% to US$27 million.

The ASX share recently increased its EBITDAF profit guidance to between US$54 million to US$58 million. This was an increase from guidance of US$50 million to US$54 million. The business is still aiming to reach US$1 billion of revenue in the future.

Is the Pushpay share price a buy?

Ben Griffiths from fund manager Eley Griffiths recently wrote:

“Over the last 12 months it has become clear PPH is at an inflection point for both cashflow and earnings. Under the stewardship of CEO Bruce Gordon, PPH has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress). We believe the next few years for PPH will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash.”

The Pro service still rates the Pushpay share price as a buy. Pro likes the cross-selling opportunity for new and existing customers. It also likes the US faith sector opportunity whilst also having the ability to expand to other markets such as non-faith organisations, as well as smaller churches. International growth could also be an option.

Pro finished its review of the HY21 result with these comments: “The management situation is something we need to keep an eye on, with more turnover at the executive and board level than we like to see. But the business itself appears to be firing on all cylinders and has further capacity to continue increasing its operating leverage.”

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Down 22% in 3 weeks, is the Pushpay (ASX:PPH) share price a buy? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!