Wells Fargo downgrades Bill to Equal Weight on growing list of risks

As previously reported, Wells Fargo analyst Andrew Bauch downgraded Bill (BILL) to Equal Weight from Overweight with a price target of $75, down from $80. Despite shares trading well below historical levels, the firm believes Bill faces a growing list of risks which make it difficult to be overly constructive at this time. As a reminder, Q1 results were marred by several developments, namely suppliers are becoming discerning around payment acceptance costs, actions to tighten credit exposure leading to questions around the health of Bill’s SMB base, and guidance implying a sequential decline in take rate for the first time, which based on Wells’ conversations appeared to lower the buy side’s terminal take rate and virtual card penetration potential. With less confidence in Bill’s ability to offset TPV/customer headwinds with take rate expansion, and the growing competitive threat from Intuit (INTU) unlikely to retreat, the firm prefers to be on the sidelines at this time.