Monitise Plc (LON:MONI)’s expansion of its partnerships with Banco Santander, S.A. (ADR) (NYSE:SAN) (BME:SAN), Telefonica S.A. (ADR) (NYSE:TEF) (BME:TEF), and Mastercard Inc (NYSE:MA), as well as the broadening of its relationship with International Business Machines Corp. (NYSE:IBM) are important demonstrations of confidence in the mobile banking software developer, says BTIG.
Mark Palmer and Giuliano Bologna of BTIG, in their research report dated Nov. 28, 2014, suggest the latest positive signals are welcome in the wake of Visa Inc (NYSE:V)’s announced intention to exit its stake in Monitise.
Three players add or take stakes in Monitise
On Thursday, Monitise announced that Santander and Telefonica have taken stakes, while Mastercard Inc (NYSE:MA) enhanced its stake in the U.K.-based software developer for mobile banking systems. The three companies have invested a combined 49.2 million pounds in Monitise on a total of 161 million shares or 8.2% of prior shares, at 30.5p, the price at which the software developer’s stock closed on Wednesday.
The BTIG analysts believe it was significant that Monitise didn’t need to offer the shares at a discount to gain the three firms’ investments, underscoring the strength of their endorsements. Following the announcement, Monitise shares rose 11.5% in London after rising nearly 17% intra-day.
As reported by us in October, shares of the mobile banking software developer were more than cut in half in 2014, and recent news that Visa Inc was moving its mobile payment development in-house hasn’t helped. Moreover, confusion about the impact of Apple Inc. (NASDAQ:AAPL)’s mobile payment systems has further cast doubt on Monitise’s future. However, BTIG analyst Mark Palmer believes concerns the software developer is going to be squeezed out by larger payment processing companies were overblown. BTIG remained consistent with its Buy rating on the mobile banking software developer.
Would allay investors’ concerns
Mark Palmer and team point out that Monitise reiterated both its short-term and long-term guidance, with management continuing to guide to at least 15% revenue growth for the fiscal year ending June 2015. The analysts believe the reiteration of the 200 million registered users and GBP2.50 ARPU targets were particularly meaningful, insofar as there has been a spate of recent questions among investors about whether there would be slippage from those figures.
Earlier the mobile payment firm announced a switch from a one-time license fee business model to a subscription-based model. Palmer believes this switch over to a new model might eventually work out well.
Commenting on Telefonica’s latest move to take a stake in Monitise, The BTIG team said they believe the software developer will roll out services for the mobile provider in Brazil and one other Latin American country in 2015. The BTIG team also note that Monitise will be working with Mastercard Inc (NYSE:MA) on its cross-border mobile remittance capabilities, while the mobile payment firm will also deploy International Business Machines Corp. (NYSE:IBM)’s Watson cognitive computing technology within its services, adding intelligent segmentation to its mobile app offerings.
The company has become a ‘battle ground stock’ with Leon Cooperman taking a big long position, and several Tiger Cubs betting against the firm.