On Wednesday, Monness Crespi Hardt adjusted its price target for Global Payments Inc. (NYSE: NYSE:GPN) shares, a leading worldwide provider of payment technology and software solutions, to $155.00, decreasing from the previous target of $165.00. Despite the reduction, the firm maintains a Buy rating on the stock.
The price target revision follows Global Payments' Investor Conference held on Tuesday, where the company outlined its strategic goals and growth trajectory through calendar year 2027 (C27). A key takeaway from the event was the management's guidance for mid-single-digit (MSD) to approximately 10% growth in revenue and earnings per share (EPS) for calendar year 2025 (C25), which is expected to accelerate to MSD to high-single-digit (HSD) and low teens growth in C26 and C27, respectively.
The provided preliminary outlook for C25, however, came in below the analyst's expectations and, to a lesser extent, the consensus. This prompted the analyst to lower estimates for C25 and adjust the price target accordingly. The new target is based on approximately 12 times the projected C25 EPS.
During the conference, management also discussed its plans to streamline operations. The company aims to sell approximately $500 million to $600 million in non-core businesses over the next three years. This strategy is part of addressing legacy issues from Global Payments' roll-up strategy, which has resulted in a disjointed and often redundant back end, slowing innovation and limiting capital allocation flexibility.
The analyst believes that the actions Global Payments is taking are necessary for making the company more competitive and extending its potential for growth. The C25 preliminary outlook is seen as creating an opportunity for upward revisions in the future. However, the analyst suggests that any potential upward revisions to estimates are likely to be postponed until after the first quarter of 2025 earnings report.
In other recent news, multiple analysts have adjusted their outlooks on Global Payments. B.Riley reduced the price target to $194, while maintaining a Buy rating, citing the company's favorable three-year outlook. The firm expects Global Payments to maintain mid-single-digit or better revenue growth, double-digit earnings per share (EPS) growth, margin expansion, and significant capital allocation to share repurchase over the next three years.
BMO Capital Markets also revised its price target for Global Payments from $126 to $122, maintaining a Market Perform rating due to the company's 2025 guidance falling short of market expectations. Despite this, the firm viewed positively the company's plans for increased stock buybacks and potential upside from asset disposals.
William Blair downgraded Global Payments from Outperform to Market Perform due to concerns over long-term organic revenue growth. Conversely, Goldman Sachs (NYSE:GS) reaffirmed its Buy rating, expressing confidence in the stock based on Global Payments' continued strong performance in revenue and earnings per share growth.
TD Cowen, despite reducing the company's stock target to $122, maintained a Buy rating, expressing optimism about the company's long-term potential. RBC Capital also maintained an Outperform rating, even though Global Payments' growth projections for 2025 trailed their estimates. These recent developments highlight the company's commitment to operational efficiency, shareholder returns, and a strategic shift towards faster-growing products and solutions.
InvestingPro Insights
In light of Monness Crespi Hardt's recent price target adjustment for Global Payments Inc. (NYSE: GPN), current data from InvestingPro provides additional context for investors considering the company's stock. With a market capitalization of $26.42 billion and a forward-looking P/E ratio of 15.73, Global Payments appears to be trading at a valuation that is attractive relative to its near-term earnings growth potential. This is further underscored by a PEG ratio of just 0.23, suggesting that the company's earnings growth may not be fully reflected in its current stock price.
InvestingPro Tips highlight that analysts predict Global Payments will be profitable this year, with net income expected to grow. Moreover, Global Payments has a track record of consistent dividend payments, having maintained them for 24 consecutive years, which may appeal to income-focused investors. The company's commitment to profitability and shareholder returns is also evident in its gross profit margin of 62.84% over the last twelve months as of Q2 2024.
For investors seeking further analysis and additional InvestingPro Tips, there are 4 more tips available that provide a deeper dive into Global Payments' financial health and future prospects. These can be found at https://www.investing.com/pro/GPN, offering a comprehensive tool for those looking to make an informed investment decision.
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