Morgan Stanley said it’s time to buy Bill.com Holdings , which can jump more than 30% thanks to its market leadership in a growing payments sector. Analyst Keith Weiss initiated coverage of Bill.com with an overweight rating, saying the stock is at an “attractive entry point” after tumbling this year on macroeconomic concerns. Bill.com is 32% lower this year and about 51% off its 52-week high. “Strong secular tailwinds driving penetration into a nascent market opportunity which can potentially reach $80B, a defensible moat within an effective distribution strategy and a solid track record of execution outweigh risks of SMB exposure, as investors seek the highest quality software assets,” Weiss wrote in a Monday note. The analyst said investors are undervaluing a company that is expected to have a long runway for growth as a category leader in digitizing accounts payables and receivables for small- and mid-sized businesses. Weiss estimates that Bill.com will deliver greater than 40% compounded annual growth rate (CAGR) over the next five years. “A compelling value proposition, differentiated go-to-market strategy through direct sales, accounting partnerships, and financial institution partners, supporting a +65% revenue CAGR (CY21–CY23E), the second fastest in our coverage, and a solid track record of execution create a favorable risk/reward for BILL, thus we initiate at OW,” read the note. The firm’s $220 price target is 31% above where shares closed Friday at $167.39. The stock jumped 2.5% in Monday premarket trading. —CNBC’s Michael Bloom contributed to this report.
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