On Monday, Susquehanna maintained a positive outlook on Shift4 Payments (NYSE:FOUR), increasing the price target to $105 from the previous $97. This adjustment comes as the firm anticipates the company's upcoming earnings release and reflects an analysis of industry trends and company-specific developments.
The analyst's commentary highlighted several factors influencing this positive stance. Notably, Shift4 Payments' recent debt financing and insights from peer performance were considered. According to reports, Mastercard (NYSE:MA)'s U.S. domestic consumer volume growth saw a slight sequential acceleration, while Visa (NYSE:V)'s remained consistent. Acquirers like Fiserv (NYSE:FI) have described consumer spending growth as stable.
Susquehanna has also refined its financial model for Shift4 Payments based on specific events in the third quarter of 2024, such as the issuance of senior notes in August. The firm extended its estimates out to 2026, which contributed to the raised price target.
Shift4 Payments had previously hosted an Analyst Day in November 2021, where it provided medium-term guidance for 2024. The company's projections for end-to-end (E2E) volume were $160 billion, with gross revenue expectations of $3.5 billion and gross revenue less network fees (GRLNF) of $1.15 billion.
However, Susquehanna's forecasts are more optimistic, with an E2E volume of $172 billion, gross revenue of $3.6 billion, and GRLNF of $1.38 billion, exceeding the consensus estimates of $170 billion for E2E volume and $1.36 billion for GRLNF.
In summary, Susquehanna believes that Shift4 Payments is on track to surpass its mid-cycle guidance, suggesting a significant compound annual growth rate (CAGR) in E2E volume of over 50% and a GRLNF CAGR of over 30% over the past three years. Interested parties were invited to reach out via email or to Susquehanna sales for further discussion on these projections.
In other recent news, Shift4 Payments has been the focus of several analyst firms. DA Davidson maintained a positive stance on the company, raising its stock price target from $104 to $118, citing strong financial forecasts for 2026. Similarly, BTIG raised its price target to $105, highlighting the company's growth potential.
Barclays (LON:BARC) initiated coverage with an Overweight rating and a price target of $120, noting the company's growth potential in Europe and through its Starlink deals. BofA Securities also increased its price target to $100, maintaining a Buy rating due to the company's strong second-quarter performance and strategic growth drivers.
Shift4 Payments has reported a 90% increase in subscription and other revenues, a 50% rise in payment volume, and a 27% boost in gross profit. The company has been active in acquisitions, purchasing Givex Corp for approximately C$200 million to enhance its service offerings, following the acquisitions of Revel and Vectron.
Shift4 Payments also disclosed its intent to offer $1.1 billion in senior notes for general corporate purposes.
The company has formed partnerships with the Miami HEAT basketball team and Pacers Sports & Entertainment to manage ticketing transactions. These partnerships are part of the company's strategic initiatives, anticipated to enhance customer monetization on its platform.
These are the recent developments surrounding Shift4 Payments.
InvestingPro Insights
Shift4 Payments' strong market position is further underscored by recent InvestingPro data. The company's market capitalization stands at $8.02 billion, reflecting investor confidence in its growth trajectory. This aligns with Susquehanna's optimistic outlook and increased price target.
InvestingPro data reveals that Shift4 Payments has experienced impressive revenue growth, with a 28.48% increase over the last twelve months as of Q2 2024. This robust growth supports Susquehanna's projection that the company will exceed its mid-cycle guidance.
Two key InvestingPro Tips reinforce the analyst's positive stance: First, net income is expected to grow this year, which aligns with the company's strong financial performance. Second, analysts predict the company will be profitable this year, supporting Susquehanna's optimistic forecasts.
For investors seeking a deeper understanding of Shift4 Payments' potential, InvestingPro offers 11 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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