KeyBanc Re-rated These Vertical Software, FinTech Stocks Based On Current Economic Backdrop: Read To Know

KeyBanc  analyst Josh Beck noted that rates on the 10-year fell below 1% before quickly expanding by ~2%, which coincided with a dramatic digital adoption surge, triggering a rapid rise and subsequent fall for high-growth, long-duration tech assets.  He noticed rising capital costs may lead to a strategic re-evaluation towards what they refer to as "Lean Growth," a new era featuring a more balanced approach across growth and profitability, marking a pivot from a heavier growth bias (both organic and M&A) in prior years.  He ran a profitability path deep dive assessing duration to 20% operating margins over ~3-4 years to better evaluate the implications of a Lean Growth era. He ran an analysis on net cash coverage (~20% of market cap).  He also re-based his "LT rule of 40" DCF analysis (~50 on average) to contemplate higher rates (LDD WACC) and refined SBC-related expenses (mid-teens), which generally ... Full story available on