'It will prosper': Analysts say buy this global fintech stock with over 140% upside

Published Thu, Feb 9 20238:32 PM EST

Shares of PensionBee , the U.K.-based digital pension provider, are expected to more than double in a year, according to a number of analysts. Bank of America said the fast-growing fintech company "achieved considerable financial and strategic success" in the past year after it unveiled its latest quarterly results last month. As a result, the Wall Street bank expects the stock to rise by 216% to £2.17 ($2.63) over the next 12 months. The positive outlook will be a reversal for the fast-growing company's stock, which fell by 60% in 2022 amid a broader sell-off in the U.K.'s small and mid-cap equity market. It was trading at £0.70 a share on Thursday afternoon. However, the stock has clawed back some of those losses and risen 26% this year on a bullish outlook from analysts, as the company is expected to become profitable by the next financial year. "To achieve this after the demanding market conditions of 2022 is a testament to the company's business," BoA's analysts led by Philip Middleton said in a note to clients on Jan. 23. "Once PensionBee becomes profitable, we think that it will be significantly derisked." PBEE-GB 1Y line The bank is not alone in its positive outlook on PensionBee. The consensus price target of five analysts covering the company gives the stock 146% potential upside. Berenberg said PensionBee's high brand recognition in the U.K. means the company can reduce marketing costs in the future, which will help them achieve profitability. The German investment bank expects the stock to rise by more than 143% in the next 12 months to £1.70. "We expect marketing costs to decrease when compared to [financial year] 2022 levels," said equity analyst Alexander Bowers. "This reduction is expected to be driven by the company's improving brand recognition (more than 50% of people now recognise the brand name, based on consumer survey data)." Founded in 2014, PensionBee now has £3 billion of assets under administration across 183,000 customers. In comparison, competitor Hargreaves Lansdown manages £39 billion in assets on its self-managed pension platform, the largest in the U.K. PensionBee's growth target — capturing 2% of the £700 billion U.K. pensions market — over the long term now looks more achievable, according to Bank of America, thanks to the company's performance in 2022. "The most important lesson of the FY 22 update, in our view, is that the risk in PensionBee has fallen further. If it can prosper in the cold climate of last year, it is reasonable to assume, we think, that it will prosper in future," they added.