DA Davidson maintains Shift4 Payments stock with a buy rating

On Thursday, DA Davidson reaffirmed its Buy rating and $124.00 price target for Shift4 Payments (NYSE:FOUR), representing significant upside from the current price of $96.93. According to InvestingPro analysis, Shift4 currently shows signs of being undervalued, with strong financial health metrics and impressive revenue growth of nearly 30% over the last twelve months. The endorsement follows the announcement last week of Shift4’s intention to acquire Global Blue for an enterprise value of $2.5 billion. Global Blue reported a 20% year-over-year revenue increase to €131 million ($137 million) for its fiscal third quarter (December) and a 31% jump in adjusted EBITDA to €52 million ($55 million). Alongside these results, Global Blue’s management confirmed their fiscal 2025 (March) financial forecast, anticipating adjusted EBITDA of €185 million to €205 million ($194 million to $215 million). This growth trajectory aligns well with Shift4’s own impressive five-year revenue CAGR of 35%.

Shift4 Payments, a provider of integrated payment processing solutions, made headlines with its prospective acquisition of Global Blue, a company specializing in tax-free shopping and payment solutions. The deal is expected to expand Shift4’s reach in the global payment market and enhance its suite of services.

Global Blue’s recent financial performance, as reported, indicates solid growth and a positive outlook for the future. The company’s ability to sustain revenue and EBITDA growth amidst global economic challenges has been noteworthy. The reiteration of their fiscal 2025 guidance suggests confidence in their long-term strategy and financial health.

DA Davidson’s analyst plans to conduct a thorough review of Global Blue in the coming 2-3 weeks to gain a deeper understanding of the business and the risks associated with the acquisition. This due diligence process is critical for providing informed insights to investors regarding the potential impacts of the acquisition on Shift4 Payments’ future performance.

The acquisition is anticipated to be a strategic move for Shift4 Payments, aiming to bolster its position in the international payment processing landscape. As the deal progresses, investors and industry observers will likely keep a close watch on how the integration of Global Blue will influence Shift4’s operations and financial outcomes. Despite recent market volatility, Shift4 has demonstrated strong performance with a 25.54% return over the past year. For deeper insights into Shift4’s valuation and growth prospects, including 10 additional ProTips and comprehensive financial analysis, visit InvestingPro.

In other recent news, Shift4 Payments has reported its fourth-quarter earnings, showing significant year-over-year growth with net revenue increasing by 50% and adjusted EBITDA by 51%. Despite these robust results, the company’s financial guidance for 2025 did not meet the expectations of some analysts. Alongside the earnings announcement, Shift4 Payments unveiled a major acquisition of Global Blue for approximately $2.5 billion, marking the largest deal in the company’s history. This acquisition is expected to expand Shift4 Payments’ capabilities in the payment processing landscape.

Analysts have responded with mixed adjustments to Shift4 Payments’ stock price targets. DA Davidson reduced its price target to $124 due to potential integration challenges with Global Blue, while maintaining a Buy rating. Conversely, Keefe, Bruyette & Woods increased their target to $125, citing strong growth drivers and strategic initiatives. Additionally, Raymond (NSE:RYMD) James raised their price target to $140, viewing the acquisition as a strategic fit and expressing confidence in the company’s long-term growth potential.

The company’s Investor Day further highlighted its strategy, focusing on cross-selling and international expansion opportunities. Management expressed confidence in achieving high teens organic growth over the next three years, with potential acceleration from recent acquisitions. Benchmark analysts maintained a Hold rating, considering the immediate financial performance concerns against the long-term potential of the Global Blue acquisition.

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