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On Wednesday, Wolfe Research adjusted the firm's view on Corpay (NYSE: CPAY), upgrading the stock from Peerperform to Outperform and setting a new price target of $420.00.
The upgrade reflects Wolfe Research's confidence in Corpay's sustained growth trajectory, underpinned by a robust capital position and the ability to reinvest in its Corporate Payments segment. With a current market capitalization of $24.2 billion and trading at $347.63, the stock has shown strong momentum with a 28% gain over the past six months.
Wolf Research highlighted Corpay's advantages, including margins that exceed the industry average and a solid presence in the B2B payments market, with a focus on offering comprehensive accounts payable solutions. According to InvestingPro data, the company maintains an impressive 78.3% gross profit margin and has demonstrated consistent profitability. T
he analyst pointed to recent investments in the Corporate Payments sector, including GPS and Global Reach, and in the Lodging segment through ALE, Levarti, and Roomex, as key factors in diversifying Corpay's revenue streams.[Get detailed insights into Corpay's financial health and 5+ additional ProTips with InvestingPro, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks.]
The report also underscored Corpay's strategic direction, particularly within Corporate Payments, as a positive development. Wolfe Research anticipates that Corpay's commitment to this strategy will become evident in the company's organic revenue trends in the upcoming quarters.
However, the analysis acknowledged challenges in other areas of Corpay's business. The growth of the Vehicle segment is currently limited by a slow US fleet market, and the Lodging business is experiencing decreased demand from the workforce. Despite these hurdles, Wolfe Research expects year-over-year comparisons to ease, which should contribute to a rebound in growth throughout 2025.
Analyst consensus remains cautiously optimistic, with price targets ranging from $310 to $440, while the company maintains a GOOD overall financial health score according to InvestingPro metrics.
In other recent news, corporate payments leader Corpay has been the subject of several noteworthy developments. Analysts from Raymond (NS:RYMD) James and BMO Capital Markets have maintained an Outperform rating on Corpay, with BMO Capital Markets increasing the price target to $440.00, reflecting confidence in the company's growth prospects. Corpay's CFO, Tom Panther, is set to leave the company, with a search for his successor currently underway.
Corpay has made significant strategic moves, including the acquisition of GPS Capital Markets and Paymerang, anticipated to contribute over $200 million in revenue and add approximately $0.50 to Cash EPS accretion in 2025. The company also divested its Comdata Merchant POS Solutions to PDI (OTC:IDXG) Technologies as part of its business model streamlining efforts.
Furthermore, Corpay's subsidiary, TA Connections, announced a collaboration with Uber (NYSE:UBER) for Business, introducing a new feature in its TA Disruption Hub platform that schedules 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, falling short of analysts' expectations. 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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