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On Wednesday, Wolfe Research adjusted its outlook on Corpay (NYSE:CPAY) shares, raising the price target to $440 from $420 while maintaining an Outperform rating. The firm’s analyst, Darrin Peller, highlighted Corpay’s robust performance, noting a 12% increase in its stock price year-to-date compared to the S&P 500’s 3% rise. Over the past twelve months, Corpay’s stock has surged by 29%, outpacing the S&P 500’s 24% gain.
According to Peller, Corpay’s long-term growth trajectory remains strong, supported by sufficient capital and opportunities to reinvest in its Corporate Payments segment. The company has been acknowledged for its above-average industry margins and a solid position in the business-to-business (B2B) payments market, with a focus on selling comprehensive accounts payable solutions. This is reflected in the company’s impressive 78.3% gross profit margin and strong cash flow generation, according to InvestingPro data, which offers deeper insights through its comprehensive Pro Research Report, available for over 1,400 US stocks.
The analyst also pointed out Corpay’s recent investments in its Corporate Payments division, including acquisitions like GPS and Global Reach, as well as its Lodging business through ALE, Levarti, and Roomex. These strategic moves are expected to further diversify the company’s revenue streams. Peller expressed a positive view on Corpay’s strategic direction, particularly within its Corporate Payments sector, and anticipates that organic revenue trends will provide evidence of success in the coming quarters.
Despite challenges such as a sluggish U.S. fleet market impacting the Vehicle segment and weaker workforce demand affecting the Lodging business, Peller foresees a potential reacceleration throughout 2025. The analyst anticipates that easing year-over-year comparisons and a drop in interest expense headwinds, based on current estimates, will contribute to a rebound in the latter part of the year.
Wolfe Research expects Corpay’s sales growth and improving same-store trends to drive an acceleration in organic growth, with an additional mid-single-digit lift to revenues in 2025 from inorganic contributions. This positive shift in revenue mix towards Corporate Payments, along with improving trends in the Vehicle and Lodging segments, supports the belief that Corpay can achieve its long-term top-line and mid-teens EPS growth targets, justifying a premium multiple compared to the S&P 500.
Currently, Corpay’s shares are trading at 17.1 times next twelve months (NTM) EPS, which is above its historical median multiples. However, when compared to the market, the stock is trading at a 5.0 times discount, which is narrower than its historical spreads. Peller’s Outperform rating and the increased price target of $440 are based on approximately 17 times the firm’s calendar year 2026 EPS estimate of $25.83, which remains unchanged. InvestingPro data shows the stock trading at a P/E ratio of 26.55, with 7 analysts recently revising their earnings expectations downward for the upcoming period. Investors seeking detailed valuation metrics and additional ProTips can access the full analysis through InvestingPro’s comprehensive research platform.
In other recent news, Corpay has been the subject of several significant developments. Citi has assigned a Buy rating to Corpay’s stock, citing strategic initiatives as a key growth driver. The company’s recent acquisitions of GPS Capital Markets and Paymerang are expected to generate over $200 million in revenue and contribute to a $0.50 increase in Cash EPS accretion by 2025. Analysts from Wolfe Research and Raymond (NSE:RYMD) James have expressed confidence in Corpay’s growth trajectory, upgrading the stock to Outperform and raising the price target, respectively.
BMO Capital Markets also maintains an Outperform rating, increasing the price target to $440, indicating a positive outlook on the company’s growth. Corpay’s CFO, Tom Panther, is set to leave the company, and a search for his successor is currently underway. Corpay’s subsidiary, TA Connections, has announced a collaboration with Uber (NYSE:UBER) for Business, introducing a new feature to schedule Uber rides for passengers facing flight disruptions.
Corpay’s third-quarter financial results showed revenue of approximately $1.029 billion and earnings per share of $3.90. The company’s fourth-quarter 2024 organic revenue and earnings are projected to align with previously issued guidance. These are the recent developments for Corpay.
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