The Tyro Payments Ltd (ASX: TYR) share price was on a tear on Wednesday, closing 12% higher at $1.22.
2022 has been a volatile year for the payments business. While the Tyro share price is still down by around 60% year to date, it has more than doubled since the start of July 2022.
The company didn't announce any news today. However, it was only a couple of days ago that Tyro released its FY22 result.
But it was not just Tyro shares in the green on Wednesday. Today was a positive day for technology shares and financial shares. The Zip Co Ltd (ASX: ZIP) share price rose 11.7%, the Commonwealth Bank of Australia (ASX: CBA) share price closed 0.95% higher, and the Xero Limited (ASX: XRO) share price finished up 3.72%.
Let's have a closer look at what's been happening with Tyro lately.
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Experts are optimistic about the Tyro share price
Brokers and analysts have been giving their opinions on the business, and some price targets are pretty bullish.
For example, after looking at the FY22 result, Morgans rates Tyro as a buy with a price target of $1.70. That implies a rise of almost 40% over the next 12 months. The result and earnings guidance were better than the market had been expecting. Morgans thinks that the outlook for FY23 demonstrates the strengthening operating leverage of the business.
Ord Minnett is another broker that rates Tyro as a buy, with a price target of $1.40. The FY22 result was stronger than the broker had been expecting. It also liked the FY23 guidance. It thinks the ASX payments business can grow its market share thanks to new products.
What did the company report in FY22?
Tyro said that the number of merchants using Tyro increased by 10% to 63,770, while the value of transactions increased 34% to $34.2 billion.
The company reported payments revenue of $318.8 million, up 39%, and gross profit of $147.7 million, up 34%. E-commerce now represents 1.5% of total transaction value, which increased 640% to $519.9 million during the year.
It generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $10.7 million, down from $14.2 million in FY21 but better than expected. Profitability may be important to investors when evaluating the Tyro share price.
Tyro said that the alliance with Bendigo and Adelaide Bank Ltd (ASX: BEN) is "tracking ahead of expectations". It was also appointed as the exclusive partner of Telstra Corporation Ltd (ASX: TLS), offering merchant acquiring solutions to Telstra's business customers.
In FY23, July transaction values increased 46% to $3.4 billion, while August saw growth of 70% to $2.9 billion (up to 26 August).
Looking at the guidance, Tyro said it forecast the FY23 transaction value to be between $40 billion to $42 billion, normalised gross profit to be between $175 million to $181 million, and it's targeting 'operating leverage' at around 85%. The ASX share is aiming to be free cash flow positive "on exiting FY23".
Tyro share price snapshot
Over the last month, Tyro shares have jumped almost 50%.
