Tyro Payments is an Australian merchant acquirer business competing against the major banks. Morgan Stanley believes this presents a rare opportunity to gain exposure to the payments system.
Card payments in Australia are worth around $650m in total transaction value per annum and are a structural growth story, increasing 7% per annum.
The broker does not expect Tyro to be profitable in FY20-21 as it requires further scale. Morgan Stanley initiates coverage with an Overweight rating and $4.15 target. Industry view is Attractive.
Sector: Software & Services.
Target price is $4.15.Current Price is $3.42. Difference: $0.73 – (brackets indicate current price is over target). If TYR meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).