Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Wednesday, KeyBanc analyst Alex Markgraff increased the price target for Global Payments (NYSE:GPN) shares to $90 from the previous $80 while maintaining an Overweight rating on the stock. According to InvestingPro data, the stock appears undervalued, trading at a P/E ratio of 12.8x with analyst targets ranging from $65 to $172. The adjustment follows Global Payments’ first-quarter 2025 earnings, which aligned with expectations set during the preannouncement on April 17, 2025, coinciding with the announcement of the Worldpay/Issuer Solutions transaction.
The company’s merchant revenue showed stable growth across subsegments, with small and medium-sized business (SMB) volume growth remaining consistent. Despite a 29% year-to-date stock decline, Global Payments maintains strong fundamentals with a 63% gross profit margin and has sustained dividend payments for 25 consecutive years, as highlighted by InvestingPro. Certain leading indicators, such as point-of-sale and software bookings, as well as integrated and new annual recurring revenue (ARR) growth, experienced a slowdown from the fourth quarter of 2024. Core payments’ new ARR remained stable.
During the earnings call, significant time was dedicated to discussing the rationale behind the Worldpay transaction. Analysts found the details provided on synergy opportunities and the pro forma financial profile to be incrementally positive. The updated medium-term (MT) guidance, which is post the Worldpay transaction close, indicated the high end of the previously shared medium-term revenue growth guidance (mid-high single digits), 50-100 basis points of margin accretion, and a mid-teens range for earnings per share (EPS) growth accretion, up from the prior low-teens forecast.
In light of these developments, KeyBanc’s fiscal year 2025 and 2026 estimates for Global Payments have been revised upwards. This is a result of more favorable macroeconomic commentary and reduced foreign exchange headwinds than previously anticipated. The analyst’s decision to raise the price target is based on the potential for higher EPS, with current diluted EPS at $6.19. For deeper insights into Global Payments’ valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Global Payments Inc. reported its first-quarter earnings for 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $2.82 against the forecasted $2.73, while revenue matched projections at $2.2 billion. This performance was supported by a 5% growth in constant currency adjusted net revenue and a 6% increase in Merchant Solutions revenue. Analysts from Keefe, Bruyette & Woods highlighted the strategic importance of the Worldpay acquisition, noting the integration as a pivotal aspect of Global Payments’ investment case, despite potential execution risks. Keefe analysts raised the stock target to $81, reflecting a positive outlook based on favorable volume trends and the company’s transformation strategy. Meanwhile, Raymond (NSE:RYMD) James also increased the stock target to $92, citing the potential for Worldpay integration to enhance Global Payments’ mid-term targets. However, JPMorgan reduced the stock target from $115 to $85, maintaining a Neutral rating, expressing caution about predicting accelerated growth for the merged entity due to the complex nature of the integration. The Worldpay acquisition remains a focal point, with management emphasizing the expected synergies and strategic benefits of the deal.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.