Truist Securities initiates Shift4 stock with hold rating on growth concerns

Published 02/06/2025, 15:02
Truist Securities initiates Shift4 stock with hold rating on growth concerns

On Monday, Truist Securities analysts initiated coverage on Shift4 Payments stock (NYSE: FOUR) with a Hold rating and set a price target of $97, falling within the broader analyst range of $90-$150. According to InvestingPro data, the stock currently trades at $94.49, with analysis suggesting it may be undervalued despite its high Price-to-Book ratio of 10.6x. Analysts expressed concerns about Shift4’s acquisition-led growth strategy, suggesting it could make the company reliant on continually finding new deals and potentially lead to churn risk due to underinvestment in its software and point-of-sale assets.

Analysts noted that earnings revisions have historically driven Shift4’s stock performance, with 13 analysts recently revising earnings estimates upward. They anticipate that once the Global Blue deal closes, expected in the second half of 2025, the company’s financial numbers will improve. The stock has demonstrated strong momentum with a 40.9% return over the past year, though they recommend staying neutral until more clarity is available. For deeper insights into Shift4’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

The price target of $97 is based on an 18x multiple of the 2026 estimated adjusted net operating profit after tax (NOPAT) forecast. This forecast anticipates a 13% NOPAT growth by 2027. Additionally, the target includes an intrinsic value of $6 per share from the Global Blue transaction.

Global Blue’s impact is not yet included in the estimates, but it is considered in the valuation framework. Shift4’s future performance is expected to benefit from the deal, but analysts advise caution in the current environment.

In other recent news, Shift4 Payments has made significant strides in its business strategy and financial positioning. The company has extended its tender offer to acquire all outstanding shares of Global Blue Group Holding AG, achieving a 96.66% tender of Global Blue’s shares. This acquisition is expected to be completed by the third quarter of 2025, pending regulatory approvals. To support this acquisition, Shift4 has priced approximately €680 million in senior notes due 2033 and $550 million in senior notes due 2032. The proceeds from these notes, along with other financial instruments, are intended to fund the acquisition and potentially repay existing debt.

Moody’s has upgraded Shift4 Payments’ corporate family rating to Ba3 from B1, reflecting improved financial outlook and strategic expansion. The rating upgrade is based on expectations of a reduced debt to EBITDA ratio and enhanced market diversification following the Global Blue acquisition. Additionally, Benchmark analysts have maintained a Buy rating for Shift4 Payments, citing the company’s strong strategic positioning and growth in specific industry verticals. These developments underscore Shift4’s ongoing efforts to scale its operations and expand its market presence.

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

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.