Morgan Stanley is betting that payments platform Flywire can return to high-teens growth by 2027, even as some cross-border education payment trends remain soft. The bank raised its longer-term revenue forecasts and bumped its price target to $26 from $24 after Flywire's third-quarter results beat expectations and showed signs that its strategy of selling more products to existing clients is gaining traction.
What's driving the optimism
Flywire, which processes payments for education, healthcare, and other industries, reported Q3 revenue of $250.3 million. But Morgan Stanley's main point wasn't just the quarter. The bank argues that Flywire is shifting toward "full platform" deals, where its software products sit alongside its core payment processing. That shift, it says, can lift the annual recurring revenue per client and improve renewal rates.
One example is Student Financial Software (SFS), a suite that helps universities manage billing and financial aid. Morgan Stanley estimates SFS is only about 10% penetrated across Flywire's US cross-border customer base, leaving plenty of room to add modules over time. For a company that has historically been seen as a payments volume play, this kind of attach rate—how often clients add extra products—could make its revenue more predictable and less tied to swings in student visa flows.
The numbers behind the call
Morgan Stanley lifted its 2027-28 revenue less ancillary services (RLAS) forecasts by roughly 1.4%, to $904.8 million and $1.06 billion respectively. RLAS is a metric that strips out lower-margin ancillary services, giving a clearer picture of core revenue growth. The bank now sees about 17% RLAS growth in 2027, helped by market share gains and cross-selling.
The modest forecast increase might seem small, but it can have an outsized impact on a stock like Flywire, which trades on long-term growth expectations. That helps explain why shares jumped more than 11% on Wednesday after the report and the analyst update.
Why cross-selling matters
For investors, the key takeaway is that Flywire is trying to look more like subscription software than pure payments processing. In the software world, recurring revenue and renewals are prized because they are more predictable and often come with higher margins. If Flywire can bundle SFS and other tools into more deals, a larger share of its growth could come from those recurring fees, making its cash flows less dependent on the ups and downs of student cross-border payment volumes.
That's why even a small change in assumptions about attach rates can snowball in long-term forecasts. Morgan Stanley's analysis suggests that a 10% SFS penetration rate can move the model more than a one-quarter beat. In other words, the market is starting to value Flywire not just for the payments it processes, but for the software it can sell alongside those payments.
What it means for investors
For everyday investors, this is a reminder that analyst price targets are not just about the latest quarter—they reflect a view of how a company's business model is evolving. When a bank like Morgan Stanley raises its target, it's often signaling that it sees a structural improvement, not just a temporary bump.
That said, Flywire still faces headwinds. Student-visa trends, which affect cross-border education payments, remain a drag. And the company is competing in a crowded payments space. But if the cross-selling story plays out, Flywire could deliver more consistent growth than its payments-only peers.
Investors should also keep an eye on how the broader services economy is faring, as seen in recent data on US services growth cooling in October, which could influence spending on education and healthcare. And for those watching the tech sector, the recent slowdown at Datadog shows that even high-growth software names can stumble when growth expectations reset.
Ultimately, Morgan Stanley's call is a bet that Flywire can execute on its platform strategy. The raised target and forecasts are a vote of confidence, but the real test will be whether the company can keep converting its customer base into multi-product users. For now, the market seems willing to give it the benefit of the doubt.
