Some spicy things were said about challenger payment network Wise PLC (LSE:WISE) by Liberum analyst Nick Anderson following Thursday’s second-quarter earnings call.
Wise upped its guidance following the bumper quarter, though not everyone was impressed with the results.
Net interest income (NII) has been a massive boon for Wise in this high-interest-rate environment, something Anderson took umbrage with.
In a research note, he called NII “a low-quality, low price-to-earnings income stream” that nonetheless accounted for almost all of Wise’s quarterly earnings beat.
Core trading volumes, on the other hand, were relatively underwhelming, coming in a £29.2 billion against £29.6 billion consensus.
Wise, however, continues to bring in huge volumes of new customers, enticing them with super-low global currency transfer fees.
“Wise is a great business successfully disrupting a large market by solving for real pain points. But everything has its price,” Anderson said.
For Wise, that price is 585p against a 704p shot price at the time of writing.
But what if you want exposure to Wise’s innovative business model?
In Anderson’s opinion, Alpha Group “has a near-identical equity story” with “very similar value drivers” to Wise.
However, Wise currently trades four times Alpha’s price-to-earnings multiple on an apples-to-apples comparison. That’s pretty expensive.
With an £800 million market capitalisation, AIM-listed Alpha Group is a relative minnow compared to Wise's £7 billion market cap.
All the more room to grow, Anderson seems to think.