The UK fintech firm Boku is receiving attention from analysts, who forecast its stock could rise by 47% by 2027. This prediction comes as Rolls-Royce shares have garnered significant growth, with the FTSE 100 engine maker’s stock nearing A£13 per share, marking over 1,100% gains over three years. While Rolls-Royce captures headlines, Boku is positioned as a compelling investment opportunity.
Boku’s Growth and Business Model
Boku, listed on the AIM, has a market capitalization of A£668 million. The company specializes in connecting merchants to over 200 local payment methods (LPMs) and digital wallets, facilitating transactions in 60 countries. Its mission is to “simplify global expansion for our merchants by providing seamless access to the world’s most popular payment methods.” Notable clients include Netflix, Spotify, Amazon, and Google.
The company’s revenue trajectory has been impressive, with expectations to increase from $56.4 million in 2020 to approximately $152 million in 2026. Boku is also on a profitable path, anticipating a net profit growth of 25%, exceeding $34 million this year. The firm is particularly benefiting from growth in bundled services, where subscriptions to platforms like Netflix and Spotify are included with mobile or broadband packages.
Market Potential and Competition
The long-term market opportunity for Boku appears substantial, especially as digital wallets gain traction faster than traditional credit card usage in regions such as Southeast Asia. Currently, nearly 60% of Boku’s revenue is generated from the Asia Pacific region. Additionally, the company has been approved to access Brazil’s popular instant payment system, Pix. Boku aims for a compound annual revenue growth of over 20% in the medium term, alongside expanding profit margins.
Boku’s CEO, Stuart Neal, emphasizes the company’s commitment to operational efficiency and scalability, stating, “With increasing volumes across our network, we are prioritizing operational efficiency and building a platform with the capacity to scale significantly.” The company is also exploring the potential of stablecoin payment rails, further showcasing its innovative approach.
Despite the promising outlook, Boku faces significant competition from other fintech companies, particularly in Latin America, where Dlocal operates as a formidable competitor with a market cap of $4.2 billion.
Boku’s stock has surged by 68% since the beginning of 2024. The board believes the shares remain undervalued, and a share buyback program is currently underway. Analysts have noted that the stock is trading at 27 times forward earnings, which they consider reasonable for a fast-growing fintech poised for continued expansion.
All six brokers covering Boku have issued a “Buy” recommendation, with an average price target of 330p, indicating a potential upside of 47% from its current trading level of 223p.
As interest in fintech investments grows, Boku is positioned as a hidden gem for investors looking to capitalize on the evolving landscape of digital payments. While past investors may have overlooked Boku, its recent developments and strategic initiatives suggest it could be time for new investors to consider a stake in this dynamic company.
