Penny stock (learn more about penny stocks here) Usio (NASDAQ:USIO) is down over 2% in one year, underperforming the S&P 500’s (SPX) gain of more than 20%. Despite its lackluster performance, USIO stock should be on your radar, as analysts’ average price target suggests significant upside potential over the next 12 months. Usio provides integrated payment processing services to merchants and businesses.
Usio’s focus on growing revenues, managing its operating expenses well, adding quality customers, and investing in its technology platforms augurs well for growth. Thanks to its efforts to drive growth, Usio’s consolidated revenue increased by 25% for the first nine months of 2023. The strong growth in its prepaid card and expansion of existing customer contracts in its Output Solutions lines of business supported its top line.
Barrington analyst Gary Prestopino finds USIO’s valuation attractive. The analyst said that USIO stock remains “significantly undervalued.” Moreover, based on his sum-of-the-parts valuation basis, the company is worth $7-$8 per share. However, Prestopino pointed out that the company continues to invest in its infrastructure, marketing, and sales, which is taking a toll on its positive EBITDA generation capabilities. The analyst maintained a Hold on USIO stock on November 16.
Is USIO a Good Stock to Buy?
Based on analysts’ consensus ratings, Usio is a good stock to buy. It has received three Buy and one Hold recommendations for a Strong Buy consensus rating.
Analysts’ average price target of $7.33 implies a significant upside potential of 338.92% from current levels.
Bottom Line
Usio’s continued sales growth, exit from the crypto business, investments in technology and marketing, and solid balance sheet are positives. However, the company’s profit margins are under pressure due to its ongoing investments in growth initiatives.
