BTG afirma que VTEX deserves a 3x higher multiple and should be worth twice as much.
BTG Pactual stated that VTEX’s stock presents a “good entry point” after remaining relatively flat in an extremely volatile year for the company.
The stock traded at $10 in March, but dropped below $6 after the second quarter results. Today, it trades around $6.80.
“Looking at this volatility, investors who do not closely follow the stock could think that the thesis has dramatically changed over the year, which is far from true,” wrote analyst Osni Carfi.
“The company is one of the most consistent in our coverage, and the volatility does not reflect how stable and healthy the case is.”
BTG reiterated its ‘buy’ recommendation for the stock and raised the price target from $10 to $12.
The bank conducted an analysis of 101 software as a service companies and concluded that VTEX is trading like a technology company growing in single digits, at a multiple of 3.3x sales.
“In fact, it should be among the companies growing between 20-25% annually, trading at 9x sales, and with a much lower free cash flow yield than VTEX,” the report states.
BTG also segmented these 101 companies based on the Rule of 40, which states that the sum of a healthy SaaS company’s revenue CAGR and EBITDA margin should be more than 40.
“Once again, VTEX stands out. The group of companies with a Rule of 40 between 35-40% in 2025 (where VTEX falls) trades at 5.6x sales, a huge premium over VTEX.”
In the report, Osni also discussed two important topics for VTEX’s expansion: the company’s internationalization and the newly created retail media vertical.
The bank noted that the company has already built an international operation with “decent” revenue and good growth.
“But the ambition here is as big as the opportunity. The ‘click’ to take the brand to another level has not come yet, but the progress is clear, with the company increasingly adding larger and more relevant clients,” Osni wrote.
“We should continue to see incremental improvements until the day when VTEX will gain brand recognition and enough momentum to fulfill its ambition.”
Regarding retail media, whose goal is to help clients increase sales margins with ads, the analyst said the opportunity seems enormous.
“VTEX has full visibility of the consumer journey and can accurately quantify the return on investment in advertising (a strong value proposition that other media cannot offer).”
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.