1 Growth Stock Set to Soar 233% From Its 52-Week Low, According to Wall Street
- Bill.com just delivered 169% revenue growth for fiscal 2022 (which ended June 30).
- It processed 61.8 million transactions for business customers over the last 12 months, valued at $227.4 billion.
- Bill.com has only scratched the surface of its opportunity, and one Wall Street firm predicts major upside in the stock.
There’s still plenty of upside left in this hypergrowth technology stock.
Wall Street doesn’t always get things right. In fact, so far in 2022, many top investment banks and analyst firms have feverishly trimmed their previous price targets on some of the most popular technology stocks as soaring inflation pours water on their growth expectations.
High inflation has triggered rising interest rates, which curbs the spending power of consumers and squeezes the financial results of the corporate sector. But one company, in particular, is bucking the trend. Bill.com(BILL 3.01%) more than doubled its sales during fiscal 2022 (ended June 30), and it attracted a record-high number of customers.
Bill.com stock hit a 52-week low of $89.87 in May, but one Wall Street analyst firm is betting it will be worth $300 over the next 12 to 18 months. The stock has already bounced to $174.29 as of this writing, but that implies there’s still plenty of upside left for investors who jump aboard the train now.
Bill.com is a small business must-have
The economy continues to trend toward digitization, and Bill.com has built an important bridge that connects inconvenient paper trails to the online sphere for small to mid-sized businesses. When a business is sent mountains of paper invoices, it’s easy for them to get lost, forgotten, or routed to the wrong place, and that’s one of the problems Bill.com aims to solve.
The company’s digital inbox allows businesses to upload their physical invoices and aggregate them in one place, and from there, they can be paid with a single click. It also integrates with third-party bookkeeping software to automatically log each transaction. Put simply, it streamlines the accounts payable workflow.
But Bill.com hasn’t stopped there. It wants to be a one-stop shop for all things related to business payments, and it bolted on two new platforms in 2021 through acquisitions of Invoice2go and Divvy. Invoice2go is an accounts receivable software provider, allowing businesses to create invoices and track incoming payments, and Divvy is a comprehensive budgeting and expense management tool.
In the fiscal 2022 fourth quarter, Bill.com served a record high 400,100 business customers across the three platforms.
Bill.com’s revenue is soaring
Bill.com’s quarterly revenue crossed $200 million for the first time in the fourth quarter, and for the fiscal 2022 full year, it generated $642 million, a 169% jump compared to fiscal 2021.
Seventy percent of the company’s revenue comes from fees when a business makes a transaction on one of Bill.com’s platforms. Over the last four quarters, it has processed more than $227 billion in payment volume from nearly 62 million transactions — and it has only scratched the surface of its potential opportunity.
Bill.com estimates that in the U.S. alone, its target market consists of at least 32 million business customers who complete $25 trillion in annual transactions. Globally, the numbers are an even more staggering 70 million and $125 trillion, respectively. The company, therefore, still has a very long runway to continue its rapid run of growth.
Bill.com isn’t profitable yet because it’s still aggressively investing in acquiring customers and expanding its business. In fact, it spent $307 million on marketing during fiscal 2022 which was four-and-a-half times more than it spent during fiscal 2021. It was one contributing factor to the company’s overall net loss of $326 million for the year.
But Bill.com maintains an extremely high non-GAAP (generally accepted accounting principles) gross profit margin of 84%, which means it can quite easily generate positive earnings when it’s ready to pull back on its operating costs. For now, the company has over $2.7 billion in cash, equivalents, and short-term investments, so it can afford to run at a loss for several more years while it builds a more dominant market position.
Wall Street is on board with Bill.com stock
Of the 20 Wall Street analysts who cover Bill.com stock, not a single one recommends selling it. In fact, 18 have given it the highest-possible “buy” rating, with the remaining two attaching a “hold” rating.
The average of their price targets is $214.26, which represents a 23% upside from where Bill.com stock trades today. But one firm in particular — BTIG Research — is betting it could soar to $300, which would be a jump of 72% from the current price and, if it gets there, would mark 233% growth since the stock hit its 52-week low just three months ago.
But those targets are relatively short term in nature. In the long run, Bill.com’s enormous addressable market will likely continue to expand as more businesses transition to digital operations and require new payment tools.
Investors who hold Bill.com stock for the next decade could do far better than any Wall Street analyst is estimating right now.