Given Tyro Payments' reported year-to-date gross profit in October of around $38m, Morgans is concerned full-year guidance of $159m is a stretch despite an ability to ramp up activity once restrictions ease. FY22 and FY23 earnings per share are downgraded over 10%.

Further, it was noted a gap between transaction growth being up 25% and gross profit growth up 14%, which drove a heavy stock fall, was due to Bendigo Bank Alliance revenue share reducing gross profit. Excluding revenue share deduction, gross profit growth would be 22%.

The Add rating is retained and the target price decreases to $4.25 from $4.46.

Sector: Software & Services.

Target price is $4.25.Current Price is $3.45. Difference: $0.80 - (brackets indicate current price is over target). If TYR meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2021 Acquisdata Pty Ltd., source FN Arena