Wise's latest trading update has given analysts a "bullish outlook" on the money transfer company, although they caution about potential risks from tariffs.
The UK-based fintech reported an impressive £350m in underlying income for the fourth quarter, marking a 13% increase year-on-year, as reported by City AM.
A significant boost came from international payments, which surged 28% to £39.1bn.
Despite this growth, there was a slight decrease of 14 basis points in cross-border take rates, reflecting the fee charged by the payment processor per transaction.
Analysts at Peel Hunt have praised Wise, stating: "Wise is becoming the category leader in global consumer cross-border payments."
They have assigned an 'Add' rating to Wise's shares, with a target price of 1100p. However, the company's stock saw a slight dip of one percent to 959.5p during midday trading on Wednesday.
Tariffs could hit revenue
On April 3, Wise announced its plans to expand the share purchase program for its Employee Benefit Trust, aiming to prevent shareholder dilution from historical stock-based compensation (SBC) grants, which amount to approximately 25m shares.
Following this move, analysts have increased their earnings per share forecasts by 16% for 2026 and 20% for 2027.
Nevertheless, they warned that Wise's growth could face challenges if a tariff-induced economic slowdown occurs amidst intensifying trade wars.
The US recently imposed a hefty 145% duty on Chinese imports, prompting China to retaliate with a 125% tariff.
This escalating trade conflict could lead to higher prices across a broad spectrum of goods, potentially affecting the volume of transactions processed by Wise.
"The company remains inherently consumer-focused, with a significant share of personal cross-border flows tied to discretionary spending categories such as travel, holidays, and overseas gifting."
Analysts have warned: "If the higher tariff situation persists... Wise could face revenue headwinds," They further cautioned that any pullback on spending could "weigh on transaction volumes and ultimately impact top-line growth."
Wise is set to reveal its full-year results on June 5, 2025.
The firm's shares have taken a hit this year, sliding nearly 10 per cent since January. The stock took a nosedive in February after the US Consumer Financial Protection Bureau slapped it with a $2.5m fine.
Market watchers are predicting its underlying profit before tax margin to hover around the 20 per cent mark, aligning with Wise's trading update consensus.
Looking ahead, the company anticipates it will be nudging the upper end of its 13-16 per cent target range for 2026.
