Westpay: Long-term potential remains, but patience will be required

Westpay’s report for the third quarter of 2018 came in below our projections. The lower intake is an effect of weaker order bookings from Swedish customers due to product shifts within both card terminals and self-service, and that the international ramp-up has taken longer than earlier anticipated. As a positive note, the gross profit margin was much better than anticipated, and the company has also secured a bridge financing. We have conducted some negative forecast adjustments and also decreased our Redeye Rating, which leads to a lowered Base-case valuation.

The current share price indicates almost zero growth expectations, a little too harsh according to us. We still find the long-term potential as highly promising, but patience will be required as it could take some time before a revaluation occurs.