In a recent research note, Citi has advised investors to 'sell' shares of Wise PLC (LSE:WISE), citing high valuations and only modest growth projections for the upcoming years.
Despite the potential in its Wise Platforms division, highlighted during the industry conference Wise Connect, the division currently contributes only 5% to total revenues.
Citi pointed out that Wise’s price-to-earnings (PE) ratios are projected to be 24 times and 23 times for fiscal years 2025 and 2026, respectively.
These valuations are considered demanding, particularly in light of the expected earnings per share (EPS) compound growth of 6-7% during the same period.
This subdued growth forecast is largely attributed to the anticipated reversal of net interest income (NII), which refers to the expected decrease in income earned from interest, affecting the company's profitability.
Despite acknowledging Wise's significant total addressable market (TAM) in the platforms sector, and positive feedback on competitive dynamics from customers, Citi remains cautious about the company’s financial outlook.
In afternoon trading the stock was up a penny at 789p.