The EML Payments Ltd (ASX: EML) share price has been put through the wringer this year. Fears of regulatory intervention from the Central Bank of Ireland (CBI) plagued the business for much of the calendar year.
Fortunately, shareholders have enjoyed a rebound in the payment solutions company's share value in the last month. Yet, the EML share price remains a considerable 41% off its 52-week high of $5.89.
For this reason, some experts have high hopes for the future of EML Payments.
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EML's regulatory ball and chain
It is no secret that investors have been wary of the EML Payments share price since the CBI swept in with regulatory concerns for the company's PFS Card Services (Ireland) Limited (PCSIL) business.
However, EML has since worked with CBI to reach a number of items. Namely, the payments company will be allowed to continue signing new customers and launch new programs within material growth restrictions.
For portfolio manager, Dominic Rose, this materially de-risks the investment case for EML Payments. Rose is portfolio manager of the Montgomery Small Companies Fund and sees potential upside in the EML Payments share price following the clarity around CBI's imposed conditions.
What's important to Rose is that the approximate costs of CBI's requirements are now accounted for. In addition, the regulator has not implemented a broad-brush approach to setting limits on the company's various programs.
Even better, the growth limitations agreed upon are set to be in place for only 12 months or less. Which, all things considered, is a good outcome compared to what was initially feared.
Based on this, the portfolio manager sees an opportunity for the EML Payments share price to undergo a re-rate.
Backing the EML Payments share price
While Rose doesn't specify a definitive price target for EML, the team at UBS does.
Much like Rose, the broker considers the risks to be less than what is being reflected in the company's current value. With the costs now a known factor, the broker is optimistic of further upside from here.
In a recent note, UBS assigned a price target of $4.40. This would suggest a potential gain of 27.5% in the EML Payments share price, based on its current price.
