VOYG:CC - Voyager Digital (VYGVF)(VOYG:CA) - Volumes Below Expectations Updated Model Lowering PT
Challenging Environment. Cryptocurrency trading volumes continue to decline, as the Russia/Ukraine war, threatened legislation, and a weakening economy have raised concerns among investors in this new asset class. Data from The Block indicate trading volume in January fell to $833.6 billion from $1.04 trillion in December. February came in at $683.1 billion and March to date is just $469.8 billion. March could be the lowest month since December 2020.Updated Guidance. As a result of the disappointing volumes, we have lowered our expectations for the second half of fiscal 2022. Revenue for the fiscal third quarter (ending March 31) is now projected at $98 million, down from a prior $113 million, while we reduced fourth quarter revenue to $116 million from $175 million on the assumption current trends do not improve significantly. As a result, 3Q22 estimated EPS loss is now $0.15, from a previous estimated loss of $0.09 and 4Q22 goes to a loss of $0.10 from a prior estimated income of $0.06. We have not changed our FY23 estimates as we do expect volumes to eventually rebound.But Positives Remain. Voyager continues to diversify its revenue base, which ultimately will help offset some of the trading volatility. The debit card is in the early rollout stages, with a 200,000+ waitlist. The move into equity trading with Market Rebellion should occur in CY22. And Voyager remains on track to expand into France. Each of these, and we expect more to come, will provide more clients, more deposits, and greater revenue diversification.Lowering PT to $15. Given the current headwinds and drop in the share price, we are lowering our 12 month price target to $15 from $25. But we are maintaining our Outperform rating on the shares as we continue to believe Voyager is a leader in the emerging crypto space. At our new PT, VYGVF shares would trade at 6.0x times our FY22 revenue and 3.9 times our FY23 revenue, a discount to the peer group. Read More >>