Key Points
- Pagaya Technologies is an AI-powered fintech company that is growing but slowing down.
- Insiders are buying and have helped to put a bottom in the market.
- Analysts reduce their targets, but more than one indicator suggests a deep value with a double-digit upside.
Pagaya Technologies (NASDAQ: PGY) popped up on the Insidertrades.com radar for five transitions made in early April, marking the first insider activity in many quarters.
Five insiders, including the CEO, CTO, a director, a president, and the newly appointed CDO, Tami Rosen, bought the stock on April 4 and April 5. Insiders and large shareholders own about 20% of this tech company; purchases in April are worth about 0.3% of the stock and are coincident with bottoming in the market.
Tami Rosen is a former Apple and Goldman Sachs executive with experience connecting businesses and building teams. She was already an executive at Pagaya, but her new role is to lead the company into the next development phase by forming strategic partnerships and attracting top talent to help grow the business.
What is Pagaya Technologies? Pagaya Technologies is an AI-focused fintech specializing in loan origination. Its platform connects lenders with borrowers, providing real-time risk analysis and a win-win scenario. Lenders can build a business while mitigating risks; borrowers can find needed loans. The company was founded in 2016 and came to the public market in 2022 via a SPAC (Special Purpose Acquisition Company) merger. The stock has had a mixed performance in the two years since going public, first spiking to 200% above the IPO price and then falling 90% below it where it is wallowing.
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Analysts Cap Gains for This Undervalued Stock
Analysts' sentiment is mixed for Pagaya and plays into the stock's volatility over the past 12 months. Marketbeat tracks six analysts with coverage, a sufficient number to ensure broad ownership, and they rate the stock a Moderate Buy. The Moderate Buy rating is up compared to last year and has been steady since the end of 2023, but the price target is falling.
The consensus target forecasts more than a 300% upside for the market but is down 30% YOY and being led lower by revisions. The latest revisions are from JMP Securities and Wedbush, which set a new low target for the group. Wedbush's new target is $11.50, which still implies a value for investors - 35% above the current action. The takeaway for investors is that this market has some upside but is limited, and a significant or sustained rebound is unlikely without a change in the outlook.
The guidance for Q1 and 2024 was tepid. The company guided Q1 and the year to a range with consensus at or near the midpoint. The negative factor is that guidance expects weakness in the back half, and full-year results will be below consensus at the midpoint. Growth is also slowing from the double-digits to the single-digit range and may be optimistic given the economic conditions. Interest rates are persistently high, and credit conditions are tightening, so underperformance and/or diminished guidance should be expected in the Q1 report.
Short-Sellers Remove Burden from PGY Market
The short interest in PGY stock never became oppressive, but it peaked at 6% and was close. However, the latest data shows short interest is falling significantly from its highs and removing a burden for the market, down to about 2.5%. Assuming this trend continues, the stock could move higher soon; the question is how high it will go before topping out.
Pagaya Technologies' stock price may be at rock bottom. The latest sell-off hit a new low, but indicators diverge and show it is significantly oversold. These conditions should produce a rebound, but no reversal or sustained rally is guaranteed. At best, investors may expect a relief rally that takes it up to the $12 range, a gain of roughly 35%. A move above that level might be bullish, but this tech stock still faces significant resistance at around $14.50.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Pagaya Technologies (PGY) | $8.77 | +1.7% | N/A | -3.45 | Moderate Buy | $22.11 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
