The Tyro Payments Ltd (ASX: TYR) share price is starting the week in a very positive fashion.
In afternoon trade, the payments company's shares are up 9% to $1.72.
Why is the Tyro share price jumping?
The Tyro share price is taking off today despite there being no news out of the company.
Though, it is worth noting that Tyro was the subject of a bullish broker note out of Morgans at the end of last week. This could be giving its shares a lift on Monday.
According to the note, the broker has retained its add rating with an improved price target of $2.05.
Even after today's gain, this still implies potential upside of 19% for investors over the next 12 months.
What did the broker say?
Morgans was pleased with Tyro's update at its annual general meeting last week.
It highlights that management is now guiding to EBITDA at the high end of its target range of $28 million to $34 million in FY 2023. This was ahead of the broker's expectations, which has led to its analysts upgrading their estimates accordingly. It commented:
It continues to be a positive start for new TYR CEO John David, with improving operating momentum driving two earning upgrades in a row. For FY23, we forecast TYR to do an EBITDA margin (EBITDA to gross profit or net revenue) of ~18.5%, well up on the ~7% level achieved in the pcp. Post this improvement, we still see a good opportunity for TYR to drive significant further efficiencies, noting peers like Worldline and Adyen are producing comparable margins of ~30% and 59% respectively.
In light of this, the broker believes the weakness in the Tyro share price in 2022 has created a buying opportunity for investors. It commented:
TYR sold off heavily in the first half of 2022 affected by the broad pull back in technology stocks and overall concerns on its earnings trajectory. However, we believe recent updates are now pointing to improved business momentum and importantly a greater focus on driving profitability. Potential corporate action also remains an area of possible upside.
