Can the EML (ASX:EML) share price hit $4.80 by the end of 2021?

Can the EML Payments share price rise to $4.80 before the end of the year?

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Is it possible that the EML Payments Ltd (ASX: EML) share price could rise to $4.80 by the end of 2021?

If that were to happen, EML Payments shares would rise by around 50%.

Brokers have price targets on ASX shares. That's where analysts believe that a share price will be in 12 months from now. So, not necessarily where the price will be at the end of the year.

A broker with a $4.80 price target for the EML Payments share price

UBS is very optimistic on where EML Payments is headed. It has a price target on the payments business of $4.80.

That's despite the latest update relating to PFS and the Central Bank of Ireland (CBI). UBS thinks that a risk could be related to growth regarding new customers.

The broker believes that the drop has been overdone by the market.

Based on UBS' earnings estimates, the EML Payments share price is valued at 24x FY23's expected profit.

What did the CBI say?

A few weeks ago, EML said that it had received correspondence from the CBI about PFS Card Services about regulatory concerns and potential directions, including but not limited to the remediation plan and material growth.

EML said the directions could materially impact the European operations of the Prepaid Financial Services business.

CBI advised that PFS Card Services' proposed material growth policy, which has been requested and approved by the PFS Card Services board, is "higher than what the CBI would want to see".

CBI has also proposed that certain limits be applied to programs that, if implemented, could have a negative impact on the PFS Card Services business. EML said it was going to present to the CBI a "significant and detailed" analysis of limits applied across almost 27,000 programs along with a proposed recalibration of limits of certain programs.

CBI has invited PFS Card Services to provide it with submissions by 28 October 2021. The CBI and PFS Card Services are in ongoing dialogue about the concerns raised about CBI and PFS' remediation plan. This remediation plan remains on track.

However, EML did say that this does not concern EML's Australian or North American operations, or the operations of PFS' UK subsidiary, or its other businesses.

Other opinions on the EML share price

UBS isn't the only broker that rates EML Payments as a buy.

The brokers Ord Minnett and Macquarie Group Ltd (ASX: MQG) both rate EML as a buy, with price targets of $4.02 and $4.55 per share.

Whilst both brokers note the negative of the latest CBI correspondence, they think the issues can be resolved and things look promising for EML beyond that.

Macquarie's profit projection is particularly optimistic for FY23. Based on Macquarie's numbers, the EML share price is valued at 19x FY23's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended EML Payments. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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