Goldman Sachs sets new Monitise target price

It's been almost a month since Monitise completed its strategic review and failed to attract a sensible offer from potential buyers. Now, fully committed to going it alone, chief executive Elizabeth Buse says the mobile payments specialist is on track to make a cash profit in the year to June 2016. Goldman Sachs isn't so sure, and despite keeping forecasts and its 'neutral' view unchanged this time, it's slashed both its target price and M&A valuation.

Goldman makes no changes to estimates - it expects an £8 million loss in 2016 and cash profit of £6.3 million the year after - but revises its valuation methodology, resulting in a much lower 12-month price target.

Last week, Monitise launched its cloud-based Application Programming Interfaces (API) platform. It makes it quicker and easier for clients and third-party content providers to integrate the company's latest banking, payment and commerce products. But Goldman is demanding evidence of take-up of various products and services.

It also wants to monitor evolution of ARPU (Average revenue per user) - Monitise has now dropped guidance for its target of 200 million users and £2.50 ARPU by June 2018. The broker currently forecasts users to reach 110 million by 2018 and ARPU to reach £1.36.

"Monitise's risk/reward remains asymmetrically skewed, in our view, with significant upside potential from the current share price if there is evidence of a roadmap to reach management's medium-term targets (200 million users, £2.50 ARPU)," it says. "We remain Neutral until we see improved execution."

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