SMC Research Projects Over 100% Upside With Revised Price Target On NAGA Shares

According to reports, shares of The NAGA Group AG (XETR: N4G) climbed to their highest level in several months. This followed research firm SMC maintaining its “BUY” rating and setting a price target that suggests more than double the current price.

The fintech company from Hamburg recently closed its stock at €0.69, with SMC aiming for €1.60. While analysts are cautious about revenue and profit margins, they’re still confident the company will keep growing.

NAGA Shares Surge On Strong Revenue Growth And Strategic Merger Benefits

Because of this, NAGA’s shares on the German stock market jumped almost 9%, reaching about €0.76 — the highest since earlier this year. If it hits the €1.60 target, it would be the best price in over a year.

NAGA reported revenue growth of 7% to €16.4 million in the latest quarter, showing signs of bouncing back after cutting unprofitable parts of the business. However, its earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped to €1.0 million from €2.0 million compared to before, mostly because marketing costs went up to €1.6 million.

SMC analyst Holger Steffen pointed out some good signs, like a 10.5% increase in daily trades per user (now 2.3) and a 13.4% rise in copied trades (945,000). The value of customers over their lifetime grew by 14.2% to €3,300, though it costs 50.3% more to get new customers — up to €1,200 — because of higher marketing spend. Steffen said the increase in trades, especially copied ones, was a big reason for the 7% revenue growth.

The report also mentioned benefits from NAGA’s merger with Key Way Group (which owns CAPEX.com), combining their users to about 1.5 million in over 100 countries. This deal should save around €9 million a year.

NAGA’s UK Return Drive Long-Term Potential Amid Market Risks

NAGA also bought Trade Capital UK for GBP 1.24 million, getting approval to return to the UK market after leaving before. They expect this UK business to bring in €6.5 million in revenue and €2.5 million in EBITDA.

For this period, NAGA expects revenue around €74 million (up 19%) and wants to improve its EBITDA margin to 17% from 13%. SMC is a bit more cautious, forecasting about €72.1 million in revenue and a 14.7% EBITDA margin.

SMC’s long-term model predicts revenue could reach €225.1 million by 2031 with 30% operating margins. They used an 8.4% discount rate and applied a 20% safety margin on profits in their valuation.

Even though EBITDA was positive, NAGA posted a net loss last period because of high depreciation on investments. This is a main weakness, along with relying on unpredictable market conditions.

NAGA runs a “SuperApp” that mixes social trading, stock investing, crypto services, and neo-banking. It also offers a physical VISA card that automatically converts crypto and gives cashback.

SMC says the forecast risk is a bit above average, pointing to market ups and downs, concerns about how well marketing works, and ambitious profit goals ahead.

Shares have been between €0.30 and €1.14 over the past year, with current prices showing a solid comeback from earlier lows.