On Thursday, Goldman Sachs revised its stance on Global Payments (NYSE:GPN) shares, downgrading the company's stock rating from Buy to Neutral and reducing the price target to $122 from the previous $155. The adjustment comes as the firm anticipates downward revisions to the consensus revenue estimates for Global Payments, with InvestingPro data showing eight analysts already revising earnings downward for the upcoming period.
The company's strategy, which includes several divestitures and a realignment of its go-to-market approach, is expected to impact its revenue growth. Currently trading at a P/E ratio of 20.8, the company maintains a market capitalization of $28.35 billion.
Global Payments has indicated an expected slowdown in revenue growth for 2025 due to its restructuring efforts. Goldman Sachs analysts believe that the consensus revenue estimates carry further downside risks, primarily because of the planned divestitures. These divestitures, including the sale of AdvancedMD, are projected to be in the range of $500 million to $600 million.
Despite these concerns, InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report covering this and 1,400+ other US equities.
The financial institution's analysis suggests that these strategic moves could result in reported revenue growth ranging from a decrease of 1.5% to an increase of 0.7% for the year 2025. The revised forecast by Goldman Sachs reflects concerns over the sustainability of merchant revenue growth, which was previously supported by Global Payments' portfolio of high-performing software assets and its strong free cash flow dynamics.
The company's ability to repurchase significant portions of its stock was also a factor in the prior Buy rating. However, with the current strategic realignment and divestitures, the outlook for stock repurchases may also be affected. The change in rating and price target by Goldman Sachs provides investors with a new perspective on the potential financial performance of Global Payments in the coming years.
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