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On Wednesday, Shift4 Payments (NYSE:FOUR) shares maintained a Hold rating by Benchmark analysts following a significant announcement from the company. The outgoing CEO Jared Isaacman concluded his 26-year leadership by revealing the acquisition of Global Blue Group (GB), a tax-free shopping and payment solutions provider, for approximately $2.5 billion. This deal, announced during the company’s Investor Day in Las Vegas, represents the largest in Shift4 Payments’ history. According to InvestingPro data, Shift4 currently commands a market capitalization of $9.88 billion and shows strong financial health with a "GREAT" overall rating, suggesting solid fundamentals despite trading above its Fair Value.
Despite the magnitude of the acquisition, Shift4 Payments’ stock did not experience an uptick due to the fourth-quarter financial report, which showed a revenue shortfall when compared to Wall Street expectations. The company has demonstrated strong revenue growth of 31.37% over the last twelve months, but trades at a relatively high P/E ratio of 66x earnings. Additionally, the company’s financial guidance for FY25 was less optimistic than anticipated. This combination of events led to a roughly 10% decrease in Shift4 Payments’ share price during the extended trading session the previous evening.
The acquisition of Global Blue Group is poised to expand Shift4 Payments’ reach in the international market, offering tax-free shopping and payment solutions to travelers. The all-cash transaction underscores the company’s aggressive growth strategy and commitment to broadening its service offerings.
The financial details disclosed alongside the acquisition announcement highlighted a challenging quarter for Shift4 Payments. The revenue miss and subdued forward guidance contrasted with the company’s strategic move to bolster its market position through the Global Blue Group acquisition.
As the market absorbed the news of both the acquisition and the earnings report, Shift4 Payments’ stock did not see further decline but held steady with the Hold rating from Benchmark. Investors appeared to weigh the long-term potential of the Global Blue acquisition against the immediate financial performance concerns. InvestingPro subscribers can access detailed valuation models, 14+ key investment tips, and comprehensive financial metrics to better evaluate this significant corporate transformation. The Pro Research Report available on InvestingPro provides an in-depth analysis of Shift4’s growth strategy and market position.
In other recent news, Shift4 Payments reported robust financial results for the fourth quarter of 2024, with earnings per share (EPS) reaching $1.35, surpassing the forecast of $1.13. The company’s revenue hit $887 million, significantly exceeding the anticipated $406.93 million. Additionally, Shift4 announced a major acquisition, purchasing Global Blue for approximately $2.5 billion. This acquisition is expected to be slightly accretive to earnings per share by 2026 and is projected to unlock $80 million in revenue synergies by 2027. Raymond (NSE:RYMD) James responded to these developments by raising Shift4’s price target to $140 from $115, maintaining an Outperform rating. The firm noted the company’s strategic fit with Global Blue and expressed confidence in Shift4’s management. Shift4 also set ambitious mid-term targets, aiming for a high-teens compound annual growth rate (CAGR) in revenue and EBITDA, excluding the impact of Global Blue. Management’s guidance approach is viewed as cautious yet encouraging, reflecting a strong track record in mergers and acquisitions.
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