Citi Analyst Maintains Buy Rating for Pagaya Technologies with $40 Price Target

Citi maintains a Buy rating for Pagaya Technologies Ltd (PGY) with a $40.00 price target. The company reported Q1 revenue of $282.7 million and a net profit of $7.89 million, compared to $237 million revenue and a GAAP net loss of $21.22 million in the same period last year. Corporate insider sentiment is negative, with 77 insiders selling their shares over the past quarter.

Pagaya Technologies Ltd. (NASDAQ: PGY) reported its Q1 2025 financial results, showcasing a significant turnaround from the previous year. The company reported Q1 revenue of $282.7 million and a net profit of $7.89 million, compared to $237 million in revenue and a GAAP net loss of $21.22 million in the same period last year. This robust performance underscores Pagaya's strategic focus on profitability and efficient scaling.

Citi maintains a Buy rating for Pagaya with a $40.00 price target, reflecting confidence in the company's growth prospects. The positive financials are a testament to Pagaya's ability to navigate market challenges and capitalize on its unique business model. The company's B2B2C model, which partners with lending institutions to provide financial services, has enabled it to achieve better margin potential compared to direct-to-consumer competitors.

Pagaya's partnership with Klarna is a key driver of its growth. The company serves as the white-labeled underwriter for Klarna's installment loans, including the recent Walmart deal. This collaboration is expected to generate over $1 billion in originations in the current fiscal year, significantly boosting network volume and revenue. The Walmart deal alone could increase Pagaya's guided network volume range for 2025 by 16.5% to 18.5%.

Despite the positive outlook, Pagaya faces several challenges. Corporate insider sentiment is negative, with 77 insiders selling their shares over the past quarter. This could indicate concerns about the company's ability to manage credit impairments and maintain growth while managing risk. However, Pagaya has demonstrated a proactive approach to risk management, tightening underwriting standards and diversifying its product offerings.

In conclusion, Pagaya Technologies' Q1 2025 financial results indicate strong growth and profitability. The company's strategic partnerships and efficient business model position it well for continued success. However, challenges related to credit impairments and insider sentiment will require careful management. Investors should closely monitor Pagaya's ability to navigate these challenges and maintain its growth trajectory.

References:
[1] https://www.investing.com/news/swot-analysis/pagaya-technologies-swot-analysis-fintech-stock-poised-for-growth-amid-challenges-93CH-4140971