Misguided Selloff In Monitise Offers Buying Opportunity: BTIG

A January 13th report from equity research firm BTIG argues that the recent selloff in mobile banking applications leader Monitise is a misinterpretation of recent news. BTIG analysts Mark Palmer and Giuliano Bologna suggest that Monitise’s leg down on Tuesday was related to news that Swiss IT software developer Temenos reported weak fourth quarter sales to banks. Palmer and Bologna point out, however, that MONI “focuses on the development of mobile banking applications rather than general IT software.”

They argue the recent selling action in Monitise is a “mis-read” by investors and the financial media.

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Banks not cutting back on growth-related investments

The BTIG report also suggests that some of the recent weakness in Monitise is due to the perception that banks are pulling back on spending because of low interest rates and shrinking revenues. A January 12th article in the American Banker, however, notes that banks are not cutting back on mission-critical or growth-related budgets, and in fact are ramping up spending in key areas such as mobile banking applications.

Monitise management “scratching their heads”

Palmer and Bologna also note that the management of Monitise is not able to make public comments right now as they are in a “quiet period”, but they told the analysts Tuesday in a private conversation that they are “scratching their heads” in regard to the recent price action of company shares.

BTIG gives MONI a Buy rating

Of note, the BTIG analysts have assigned a Buy rating to Monitise shares with a standing price target of 92 p. Palmer and Bolgna also highlight that they believe the company will reach its fiscal year 2018 target of 200 million users at an ARPU of close to $4, an EBITDA margin of at least 30% and a long-term gross margin of 70%.

The company has been a big battleground stock – with Leon Cooperman pitted against Tiger Cubs.