On Friday, Jefferies analyst Trevor Williams revised the firm’s outlook on Global Payments stock (NYSE:GPN), downgrading the rating from Buy to Hold and cutting the price target to $75 from the previous figure of $100. The adjustment comes amid skepticism regarding the benefits of scale-driven deals in the merchant acquiring sector. The stock, currently trading at $69.46, has declined nearly 38% year-to-date, though InvestingPro analysis suggests it may be undervalued at current levels.
Williams expressed concerns over the long-term challenges faced by both Worldpay and Global Payments. He questioned the potential synergies from their combination, suggesting that such scale-driven mergers are not likely to succeed based on the evidence from the past five years. The analyst’s forecast for the company’s pro forma earnings per share (EPS) in fiscal year 2026 indicates that the stock is currently valued at approximately 5 times earnings. However, he noted that the strategy of increasing leverage and focusing on a more cyclical mix of assets does not seem appealing to investors in the current economic climate. InvestingPro subscribers can access 12 additional key insights about Global Payments’ valuation and growth prospects.
The revision reflects a cautious stance on the company’s strategic direction and its ability to attract investor support. Williams pointed out that the current market environment does not favor the increased risk profile associated with the company’s decision to take on more debt and invest in cyclical assets. Despite these concerns, InvestingPro data shows the company maintains a "GOOD" financial health score and has sustained dividend payments for 25 consecutive years.
Global Payments has been navigating a complex industry landscape, where mergers and acquisitions have been a common strategy for growth. However, the downgrade suggests that not all consolidation moves are being met with optimism, especially when they involve companies with existing challenges.
The new price target of $75 represents a significant reduction from the previous target, indicating a revised expectation for the stock’s performance. This change is likely to be closely watched by investors as they consider the potential impact on their portfolios.
In other recent news, Global Payments has reported adjusted net revenue of $2,205 million and adjusted earnings per share of $2.69 for the first quarter of 2025, aligning with its previous forecasts. The company is undergoing a significant transformation, having announced the sale of its Issuer Solutions business to FIS for $13.5 billion and the acquisition of Worldpay from GTCR and FIS for $24.5 billion. These transactions are expected to position Global Payments as a leading merchant solutions provider and potentially the world’s largest merchant processor, according to William Blair.
Barclays (LON:BARC) has maintained an Overweight rating on Global Payments with a $110 price target, suggesting confidence in the company’s strategic direction despite some market skepticism. Evercore ISI initiated coverage with an In Line rating and an $85 price target, highlighting the challenges of the company’s ongoing transformation but recognizing the potential for growth. The restructuring efforts are anticipated to enhance Global Payments’ financial strength, with projected pro forma adjusted net revenue of approximately $12.5 billion and adjusted EBITDA of about $6.5 billion.
The acquisition of Worldpay is expected to diversify Global Payments’ offerings, particularly in e-commerce and integrated payments, while expanding its market reach. The company has also announced plans to leverage its free cash flow for stock repurchases, aiming to increase future flexibility. These developments are subject to regulatory approvals and customary closing conditions, with the transactions expected to close in the first half of 2026.
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