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I find it interesting to review forecasts from bank research teams and brokers to see which stocks they hold optimistic views on. Their share price targets shouldn’t be taken as gospel. Yet given their expertise in the research space, I do take them seriously. Here’s one FTSE 250 share for which there could be considerable potential over the coming year.
Growth expectations
The stock in question is WAG Payment Solutions (LSE:WPS). The company, which trades as Eurowag, is a Czech-based fintech and mobility company catering to the commercial road transport sector across Europe. It provides fuel and toll payment processing through pre-paid or post-paid fuel cards, along with integrated mobility services like telematics, routing, tax refunds, and fleet management tools.
Over the past year, the growth stock has jumped by 27%. Yet from the current share price just under 82p, the expectations from analysts indicate this could go even higher. The lowest forecast for the coming year that I can see is from Deutsche Bank at 90p. The highest is Peel Hunt, with the team expecting the stock to move to 135p. This would be a 65% jump from the current price. Other banks and brokers have forecasts within this range.
Impressively, of the 10 companies with a recommendation, all of them are saying Buy. There are zero Sell or Hold ratings. Typically, share price forecasts are for where the analysts think the stock will be this time next year.
Why it could surge
The business makes money in two main ways. One is from payment solutions, the other is from mobility solutions. Both avenues are appealing as they offer stable revenues. Fees from fuel and toll transactions are a low-risk model, as vehicles are required to pay the tolls. The mobility solutions are mostly based on subscription models. This recurring revenue makes it easy to predict cash flow. Therefore, investors might continue to buy the stock because they like the operating model and can understand what’s going on.
Another reason it could do well is the scalable platform advantage. The more people who join the mobility platform, the more economies of scale Eurowag gets. As it continues to grow, it drives others to join the platform, as that’s where everyone else is.
Finally, the financial growth speaks for itself. The 2024 results showed a 7.1% revenue increase versus the previous year, with gross profit up 14%. What interested me was the generous EBITDA margin of 41.6%. This bodes very well for the future, as even if costs increase, it has a good margin buffer.
Despite all of this, the company isn’t perfect. Operating in multiple EU countries exposes it to varying tax regimes, toll structures, and compliance obligations. The regulatory risks are high and should be noted.
Overall, the positive outlook by analysts does make me consider the stock and I feel other investors might do the same.
