EV Charging Complexity And Rising Fees Will Pressure Long-Term Self-Service Payments Prospects

Catalysts

About Nayax

Nayax provides an end to end payments and management platform for automated self service commerce across multiple verticals and geographies.

What are the underlying business or industry changes driving this perspective?

• As EV charging networks pivot to higher value DC fast charging with complex regulatory demands and PIN enabled requirements, Nayax risks overcommitting hardware and integration resources to a segment where project delays, funding pressure on charge point operators and tougher compliance reviews could slow deployment and leave revenue growth below current expectations.
• While the shift toward digital and cashless payments is boosting transaction values today, rising scheme fees, acquirer concentration and dependence on smart routing gains may compress processing spreads over time, limiting further expansion in net take rate and putting pressure on recurring revenue growth and net margins.
• The aggressive expansion into embedded banking, working capital products and e commerce for EV operators requires new risk, compliance and capital capabilities. If underwriting losses or higher operating costs emerge as these products roll out in 2026, they could dilute adjusted EBITDA margins and delay the path to the long term 30 percent margin target.
• Nayax’s strategy to embed payment devices with OEMs in smart coolers, arcades and other unattended retail could face technology refresh cycles, OEM insourcing and competing platforms. These factors may slow device growth and reduce average revenue per device, leading to lower than projected hardware revenue and softer recurring revenue per customer.
• Reliance on ongoing M&A to reach the 2028 revenue objective, against a backdrop of rising valuations for attractive assets and tighter due diligence hurdles, increases the risk that deal flow remains lumpy or subscale. This would leave total revenue and earnings growth below the high thirties annualized trajectory implied in the company’s long term targets.

Assumptions

This narrative explores a more pessimistic perspective on Nayax compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Nayax's revenue will grow by 22.4% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 6.5% today to 9.7% in 3 years time.
• The bearish analysts expect earnings to reach $65.6 million (and earnings per share of $1.61) by about December 2028, up from $24.0 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $79.5 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 30.6x on those 2028 earnings, down from 74.0x today. This future PE is greater than the current PE for the IL Electronic industry at 18.8x.
• The bearish analysts expect the number of shares outstanding to grow by 1.35% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.85%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is capturing share in a structurally growing automated self service and cash to cashless market across multiple verticals and geographies, which supports sustained expansion in transaction volumes and recurring revenue rather than a prolonged revenue decline.
• Rapid adoption in high ticket categories such as EV charging, car washes and amusement, combined with rising average transaction values, increases processing revenue per device and could drive faster than expected growth in total revenue and earnings.
• Scaling embedded banking, e commerce and working capital solutions from 2026 onward may deepen customer relationships, lift ARPU and support higher net margins and EBITDA margins over the long term.
• Ongoing optimization of acquirer relationships and smart routing, together with improving hardware supply chain efficiency, has already driven processing and hardware margin expansion and could continue to support growth in gross margin and net income.
• Disciplined but active M&A, including integration of distribution partners and vertical specific software, expands the addressable market and product capabilities, which could help sustain the targeted mid thirties annual revenue growth and support higher long term earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Nayax is ₪122.01, which represents up to two standard deviations below the consensus price target of ₪160.13. This valuation is based on what can be assumed as the expectations of Nayax's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₪198.25, and the most bearish reporting a price target of just ₪122.01.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be $678.9 million, earnings will come to $65.6 million, and it would be trading on a PE ratio of 30.6x, assuming you use a discount rate of 10.8%.
  
• Given the current share price of ₪153.5, the analyst price target of ₪122.01 is 25.8% lower. Despite analysts expecting the underlying business to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.