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On Wednesday, BMO Capital Markets adjusted its outlook on Global Payments Inc. (NYSE:GPN), reducing the price target from $107.00 to $86.00 while maintaining a Market Perform rating on the stock. According to InvestingPro data, the stock has fallen nearly 29% over the past six months, with analyst targets ranging from $65 to $172, reflecting mixed market sentiment. The revision follows the company’s first-quarter performance, which aligned with previously announced results. The company generated $10.1 billion in revenue over the last twelve months, with a robust gross margin of 62.9%. Additionally, Global Payments reaffirmed its guidance for 2025, assuming stable macroeconomic conditions.
The financial firm introduced medium-term growth targets for the years 2026 to 2027 for the combined operations of Merchant Solutions and Worldpay (WP). The new forecasts suggest an acceleration of revenue growth to the higher end of mid-single to high-single digit percentages, compared to the previous range for Global Payments alone. Earnings per share (EPS) growth is also expected to increase to mid-teens, an improvement from the earlier low-teens projection. InvestingPro analysis suggests the stock is currently undervalued, trading at an attractive P/E ratio of 12.7x relative to its growth prospects.
BMO Capital’s analyst pointed out concerns regarding the execution risks that the WP acquisition might pose to Global Payments’ ongoing simplification and transformation efforts. The analyst believes that the acquisition could complicate the process of accelerating organic growth within the company.
In light of these factors, BMO Capital has decided to lower the target multiple from 9x to 8x, which has resulted in the reduced price target for Global Payments stock. The firm’s cautious stance in the near term is influenced by the elevated execution risk stemming from the WP deal.
In other recent news, Global Payments Inc. has been the focus of several analyst updates following its first-quarter earnings report. The company’s earnings and revenue results were consistent with prior projections, prompting several firms to adjust their price targets. KeyBanc raised its target to $90, maintaining an Overweight rating, while Raymond (NSE:RYMD) James increased its target to $92, keeping an Outperform rating. Both firms highlighted the potential benefits of the Worldpay acquisition in their analyses.
TD Cowen adjusted its target to $84, maintaining a Hold rating, and Keefe, Bruyette & Woods raised their target to $81, with a Market Perform rating. JPMorgan, however, decreased its price target to $85 from $115, expressing caution over the integration complexities of the Worldpay deal. Analysts from these firms noted stable trends in Global Payments’ business, but emphasized the strategic importance and risks associated with the Worldpay acquisition. The potential for earnings per share growth and synergy benefits from this deal remains a focal point for investors.
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