The EML Payments Ltd (ASX: EML) share price increased by around 25% in March 2022.
Over the same period, the S&P/ASX 200 Index (ASX: XJO) rose by 6.4%. That means EML shares beat the ASX 200 by close to 20% in just one month.
However, the gains have just reversed most of the decline seen by the business since the start of the year.
In 2022, the EML share price is now down around 9%.
What have investors been concentrating on recently with the EML share price?
Every buyer and seller has different reasons for transacting at different prices.
At the end of March, brokers at Macquarie called EML a buy, with a price target of $3.95. This was an increase from the previous target of $3.80.
Rising interest rates are expected to benefit EML.
EML had $2.7 billion as stored float on 31 December 2021. Around $2.3 billion of this was held in cash and a further $400 million was in high-rated, low-risk bonds.
Based on the current banking arrangements, if rates across all jurisdictions were to rise by 1%, this would add between $14 million to $15 million to EML's earnings before interest, tax, depreciation, and amortisation (EBITDA).
By FY24, EML could be generating $45 million of interest revenue, according to Macquarie.
In the middle of March 2022, UBS reiterated that it thinks the EML share price is a buy, with a price target of $4.55. This came after the news that EML was entering the European employee benefits market with Up Spain.
Up Spain partnership
On 16 March 2022, EML announced that it would be working with Up Spain, covering meal vouchers and employee benefit solutions, "initially" through a multi-year agreement with Up Spain.
EML said that the employee benefits market is worth more than A$88 billion globally and is expected to grow by A$20 billion between 2021 to 2025. Europe represents 35% of this market, worth more than A$30 billion per year.
Up Spain is one of the three largest providers in Spain, with over one million users across approximately 4,700 corporate clients and a network of more than 30,000 restaurants in Spain.
EML says this deal can showcase its technology and the company can use it as the basis for potential future growth in the segment within Spain and, over time, in other countries.
The ASX payments share also pointed out that Up Spain is a subsidiary of the Up Group, which offers employee benefits and incentive programs in 28 countries including Portugal, France, Germany, Belgium, Italy, Turkey, and Poland.
This program is expected to go live in the first quarter of FY23.
While EML indicated this announcement was market sensitive for the EML share price, it also said that it didn't expect the program with Up Spain to make a material contribution to EML's revenue or EBITDA in FY23.
However, management did say that the win validates EML's strategy of focusing on this segment and it provides an opportunity for material future growth.
