On Wednesday, Shift4 Payments (NYSE: FOUR) saw its stock price target increased by Piper Sandler from $93.00 to $120.00, while the firm kept an Overweight rating on the stock. The adjustment follows the company's recent financial performance, which included a higher than anticipated EBITDA margin despite some challenges.
Shift4 Payments reported third-quarter results that revealed consumer trends impacting its revenue, with gross revenue less network fees (GRLNF) and end-to-end (E2E) volume falling short of market expectations. Despite these headwinds, the company managed to achieve a significant EBITDA margin of 51%, or 54% when excluding acquisitions.
The company's financial landscape has several factors at play, including decreases in revenue from acquired legacy businesses, consumer spending patterns, the timing of contracted backlog go-lives, and fluctuations in blended spreads. These elements contribute to a lack of clarity in top-line trends compared to other companies covered by Piper Sandler.
Nevertheless, Shift4 Payments has demonstrated a consistent ability to deliver robust EBITDA results, regardless of revenue volatility. This is underscored by a projected fourth-quarter exit rate of 52% margins. As a result, Piper Sandler has increased its CY25 EBITDA projections despite reducing its FY24E GRLNF forecast.
Investors and analysts are anticipating Shift4 Payments' upcoming analyst day, where the company is expected to present updated multi-year financial and growth targets. This event will be crucial for evaluating Shift4's potential for organic growth in the coming phases.
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