Global Payments stock rises as B.Riley reiterates Buy rating

Investing.com - Global Payments (NYSE:GPN) stock rose after B.Riley analyst reiterated a Buy rating and $194.00 price target on the payment technology company. Currently trading at a P/E ratio of 12.6x with a market capitalization of $18.93 billion, InvestingPro analysis suggests the stock is significantly undervalued.

The reiteration follows reports from July 15 that activist investor Elliott Management Corp. had acquired a significant stake in Global Payments, which B.Riley identified as a potential catalyst for the stock. The timing is notable as the stock has declined over 28% in the past six months, according to InvestingPro data.

B.Riley noted that Global Payments shares are among the cheapest in both the S&P 500 and XLF financial sector index, with only four S&P 500 companies trading at lower valuations based on forward year-two earnings.

The firm expressed surprise at the low valuation given Global Payments’ consistent earnings growth in the low double digits to low teens throughout most of its history, along with strong returns on operating capital.

B.Riley’s $194 price target is based on Global Payments trading at the integrated payments sector median forward price-to-earnings ratio of 14x, which remains below both the group average of 18x and broader market averages.

In other recent news, Global Payments has announced a series of strategic moves that are reshaping its business landscape. The company is set to sell its payroll business to Acrisure for $1.1 billion, with the proceeds intended to be returned to shareholders. This divestiture aligns with Global Payments’ strategy to streamline operations and focus on its core activities. Additionally, Global Payments recently completed a $24.2 billion acquisition of Worldpay, marking its largest acquisition to date. The company is also launching new products, including the Genius for Retail point-of-sale system, which aims to support small and medium-sized retail businesses with advanced payment capabilities and business management tools.

In terms of analyst perspectives, Keefe, Bruyette & Woods has maintained a Market Perform rating with a price target of $81.00, while BMO Capital Markets has also kept a Market Perform rating with a target of $86.00. Both firms acknowledge the strategic divestiture and acquisition activities, with BMO noting a potential increase in financial flexibility due to the payroll business sale. Meanwhile, Elliott Management has reportedly built a significant stake in Global Payments, although the specifics of this investment remain undisclosed. These developments indicate a period of significant transformation for Global Payments as it navigates its strategic priorities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.