Nuvei Corporation (TSX: NVEI) provides payment technology solutions to merchants and partners in North America, Europe, the Asia Pacific, and Latin America.

Why Investors Should Book Profit?

• Overbought on Daily and Weekly Price chart: From the 14-day RSI standpoint, NVEI shares are hovering in a steeply overbought zone, with 14-day RSI at 87.86, which is considered as extremely overbought zone. This indicates that the NVEI shares are up for a correction from the current trading level.

Technical Price Chart (as on August 24, 2021). Source: Refinitiv, Analysis by Kalkine Group

• Bollinger Band© Indicating a Potential Downside: Together with stock charted in to overbought zone from the RSI standpoint, it has also decisively breached upper Bollinger Band© which is 2 times deviation from 20-day SMA. This implies that a move towards the 20-day SMA could be seen in next few trading session. Therefore, stock is up for a potential price correction.

 Technical Price Chart (as on August 24, 2021). Source: Refinitiv, Analysis by Kalkine Group 

• Highly Stretched Valuation: From the Forward EV/Sales multiple standpoints, NVEI shares are trading at a steeply high premium against the peer group. NTM EV/Sales multiple of NVEI stood at 20.78x, whereas the Industry Median NTM EV/Sales multiple stood at 11.36x, which implies a premium of ~83%.

Stock Recommendation:  Both from technical as well as fundamental standpoint, NVEI shares are up for a potential correction. Further, given the volatile market where uncertainties have heightened on the back of increasing COVID-19 cases across the world, we believe valuation consolidation could bring a price correction in the stock. Hence, we recommend a “Sell” rating on the stock at the closing price of CAD 148.97 on August 24, 2021.

*The reference data in this report has been partly sourced from REFINITIV

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