Marqeta Analyst Turns Bullish, Sees 'Clear Path To Profitability'

Marqeta Inc (NASDAQ: MQ) stock has experienced a selloff, hitting 52-week lows on Thursday.

The Oakland, California-based company generates around 70% of its revenues from Block Inc (NYSE: SQ), which uses Marqeta’s technology for its Cash App cards.

Marqeta had almost hit free cash flow breakeven last year and is likely to achieve net cash of $2.50 per share this year, according to Wolfe Research.

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The Marqeta Analyst: Darrin Peller upgraded the rating of Marqeta from Peer Perform to Outperform, while establishing a price target of $5.50.

The Marqeta Thesis: The company has several avenues to drive longer-term growth, including credit and embedded finance. It enjoys a higher margin profile, Peller said in the upgrade note.

“Non-SQ business has been showing strength in sectors such as expense management, on-demand-delivery, and more, underscoring the company's vertical diversification,” he added.

Renegotiations with Block should act as a catalyst for Marqeta, the analyst stated. “Bookings growth was strong (70%+ Y/Y growth) and supports sustainability,” he added.

MQ Price Action: Shares of Marqeta rose by 7.28% to $3.83 in premarket trading on Monday.