This Fintech Stock Trades At Half Its Peers’ Valuation – One Analyst Sees 93% Upside Potential

B. Riley said Pagaya’s current valuation of about 7.9 times its forward earnings estimate of $2.10 per share is well below comparable fintech companies.

• B. Riley reiterated its ‘Buy’ rating and a price target of $32 on the stock.
• The brokerage said the CEO’s recent purchase of about $250,000 worth of shares in the open market is a positive sign.
• Analyst Hal Goetsch said improving credit performance, growing network of lending partners, and rising profitability weaken the bearish case.

Pagaya Technologies (PGY) offers an attractive ‘catch-up’ opportunity, according to B. Riley, which said the fintech stock’s steep valuation discount to peers leaves ample room for a strong rebound. 

PGY shares, which have gained in the past four sessions, were trading around 3% higher in pre-market trading on Tuesday.

Why PGY Could Be The Next Fintech Catch-Up Trade 

Pagaya has lagged behind other fintech names such as Dave Inc (DAVE), Sezzle (SEZL), and Prog Holdings (PRG), which posted strong gains in the second quarter as concerns about consumer spending eased, noted B. Riley analyst Hal Goetsch, according to a report by Investing.com.

The firm says recent insider buying and easing credit concerns strengthen the bullish case. 

Goetsch said Pagaya’s current valuation of about 7.9 times its forward earnings estimate of $2.10 per share is well below the average 18x multiple for the comparable fintech companies.

The Numbers Behind B. Riley's Bull Case 

The brokerage believes the stock’s roughly 19% short interest could come under pressure as improving credit performance, a growing network of lending partners, a more diversified platform, and rising profitability weaken the bearish case.

Based on these factors, Goetsch sees a 93% potential upside from Monday’s closing price, reiterating his ‘Buy’ rating and a price target of $32.

Why B. Riley Has A Buy Rating

B. Riley also pointed to recent insider buying as a positive signal. According to an SEC filing on June 25, CEO Gal Krubiner purchased about $250,000 worth of shares in the open market at $15.43 each. Goetsch noted that Krubiner had purchased shares earlier in the month and in April 2024, when the stock was trading at weaker levels.

Retail’s Take On PGY

Retail sentiment surrounding PGY on Stocktwits turned ‘neutral’ from ‘bearish’ a day earlier, amid a 333% increase in message volumes.

One user expects the stock to climb to $20 by the end of the week, implying a near 18% increase from current levels.

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Another user said it’s a “good time to buy” the stock, given the upcoming results next month.

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PGY shares have declined more than 25% so far this year.

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