PayPoint – are this payments groups shares back on the rise again, the confident First Quarter Update should help, shares 739p, TP 1100p

06.08.2025

This morning’s First Quarter Trading Update from the £516m-capitalised PayPoint (LON:PAY) declared an encouraging start to the payments group’s year, which should help to push its shares back up again.

Management Statement

CEO Nick Wiles stated that:

“As we indicated at our fullyear results in June 2025, the Group has had an encouraging starto the current financial year. 

We remain confident in our operational plans, continued progress towards the delivery of our £100m EBITDA target in the current year and our longer-term growth targets for the next three years to the end of FY28.

Against the background of a generally weak economy, there continues to be consumer uncertainty and cautious behaviour in a number of our markets, which we are actively monitoring and seeking to mitigate, with tight cost discipline and a focus on the strong execution of our growth plans.

The Board remains confident in delivering further progress in the current year.”

The Business

Founded in 1996 and floated in 2003, this business offers a system for paying bills in UK, Ireland and Romania.

It was set up with the aim of enabling customers to load gas and electricity onto their pre-paid energy meters in cash at their local convenience store, PayPoint prepayment meters are intended to help customers to manage energy use, thereby helping the environment, and control their spending, thereby enabling to live within their limited means.

The system, which was first tested in Northern Ireland, was expanded to London in 1997 and in 1998, British Gas prepayment meter customers were able to charge their Quantum smart cards at PayPoint retailers.

For tens of thousands of businesses and millions of consumers, it delivers innovative technology and services that make life a little easier.

The PayPoint Group serves a diverse range of organisations, from SME and convenience retailer partners, to local authorities, government, multinational service providers and e-commerce brands.

It has over 500 major clients for its services.

Its products are split across four core business divisions:

In Shopping, it enhances retailer propositions and customer experiences through its PayPoint One/Mini devices, card payment technology, Counter Cash, ATMs and FMCG partnerships in over 60,000 SME and retailer partner locations across multiple sectors, while it services a retail network of over 28,000 convenience stores which is larger than all the banks, supermarkets and Post Offices put together;

In E-commerce, the group delivers best-in-class customer journeys through Collect+, a tech-based delivery solution that allows parcels to be picked up, dropped off and sent at thousands of local stores;

In Payments and Banking, the company gives its clients and their customers choice in how to make and receive payments quickly and conveniently, which includes its channel-agnostic digital payments platform, MultiPay, offering solutions to clients across Open Banking, card payments, direct debit and cash, it also supports its eMoney clients with purchase and redemption of eMoney across its retail network.

In Love2shop, the business provides gifting, employee engagement, consumer incentive and prepaid savings solutions to thousands of consumers and businesses. Love2shop is the UK’s number one multi-retailer gifting provider, offering consumers the choice to spend at more than 140 high-street and online retail partners. In this section Park Christmas Savings is the UK’s biggest Christmas savings club, helping over 350,000 families manage the cost of Christmas, by offering a huge range of gift cards and vouchers from some of the biggest high street names.

Together, these solutions enable the PayPoint Group to create long-term value for all stakeholders, including customers, communities and the world in which we live.

The Equity

There are some 71.19m shares in issue.

The larger holders include Invermob Coruna (30.75%), Inversis Gestion (9.04%), Santander Asset Management (7.00%), Brown Capital Management (5.41%), Liontrust Investment Partners (5.11%), BlackRock Investment Management (4.82%), Harwood Capital (4.02%), Aberforth Partners (3.67%), Threadneedle Asset Management (3.41%), and Premier Fund Managers (2.89%).

Broker’s Views

Three analysts follow the company, with the consensus average Target Price of 885p, the lowest being 600p, while the highest is 1100p.

Analysts Joe Brent and Joe Walker, at Panmure Liberum, rate the group’s shares as a Buy, with a Target Price of 1100p a share.

“We interpret PayPoint’s trading statement to mean that the trading performance is in line with expectations.

Underlying group net revenues increased by 7.5% from £39.2m in Q1 25 to £42.2m in Q1 26.

Eliminating the £0.9m contribution from obconnect, that represents 5.4% organic net revenue growth.

We see that as an impressive result given the challenging consumer environment.”

The analyst estimates for the current year to end-March 2026 are for group revenues to rise to £199.0m (£188.0m), with pre-tax profits of £72.1m (£68.0m), earnings of 75.7p (69.1p) and paying a dividend of 39.4p (39.0p) per share.

For the 2027 year, they see £211.0m sales, £80.3m profits, 90.2p earnings and 39.8p in dividends per share.

The analysts have estimates out for the year to end-March 2028, looking for £223.0m sales, £86.2m profits, earnings of 103.1p and paying a dividend of 40.2p per share.

My View

In my comments on the group in late-June, after the shares had peaked at 850p, they then went on to hit 870p, I stated that:

“I would expect to see the group’s shares ‘backing and filling’ between now and Wednesday 6^th August when it is due to announce its First Quarter Trading Update.

If the shares fall back below the 800p level between now and then, I suggest that at such levels the shares would make a very appealing investment.

In the meantime, the shares are a good firm Hold, in anticipation of another price extension, possibly above 900p and higher.”

At the end of last month, they were back down to 707p, before picking back up again to the current 739p.

I see the shares lifting a lot higher, possibly penetrating the 870p barrier again.

(Profile 17.02.21 @ 598p set a Target Price of 750p*)

Asterisk * denotes Target Price has been achieved since Profile publication.