On Friday, TD Cowen adjusted its outlook on shares of Global Payments (NYSE:GPN), reducing the price target to $125.00 from the previous $152.00. Despite the cut, the firm maintained its Buy rating on the stock. The move comes amid a period of controversy that has affected the company's stock valuation, leading to what the firm describes as significant multiple compression.
The analyst from TD Cowen noted that the concerns reflected in the stock's performance might be overstated, pointing out that management has delivered consistent messages to the market. According to the firm, the fears surrounding the stock do not entirely match the company's fundamentals, especially when considering a more conservative analysis.
Global Payments is anticipated to achieve double-digit adjusted earnings per share (EPS) growth based on estimates that are lower than the street's expectations. The analyst emphasized that the market might be undervaluing the company's cautious approach and that the current sell-off in shares might be excessive.
Looking ahead, TD Cowen highlighted that an upcoming Fall Investor Day event could be pivotal in changing the market's perception of Global Payments. The firm suggests that this event will be significant in altering investor sentiment and could potentially act as a catalyst for the stock.
In conclusion, while acknowledging the current challenges and the longer timeframe required for sentiment to shift, TD Cowen reiterates its Buy rating on Global Payments. The firm's stance suggests confidence in the company's ability to navigate through the present concerns and emerge with a strong growth trajectory.
In other recent news, Global Payments has been the focus of several analyst firms, including Wells Fargo, Mizuho Securities, BMO Capital Markets, and KeyBanc Capital Markets.
Wells Fargo initiated coverage on Global Payments with an Equal Weight rating, anticipating mid-single-digit-plus revenue growth and low-double-digit earnings per share growth in the near term. Mizuho Securities lowered its share price target to $105, maintaining a Neutral rating due to less-than-expected growth in the merchant acquiring segment and a disappointing forecast for fiscal year margin expansion.
BMO Capital Markets revised its share price target from $143 to $128, citing concerns about the company's organic growth sustainability, while KeyBanc Capital Markets also reduced its stock price target to $145, following the company's Q1 2024 earnings report, which revealed revenue in line with expectations and slightly better-than-anticipated operating margins and earnings per share.
These are recent developments, with all firms showing a keen interest in Global Payments' future growth strategy and margin improvement plans.
InvestingPro Insights
Amid the reassessment by TD Cowen, InvestingPro data and tips offer additional insights into Global Payments' (NYSE:GPN) current market position. With a market capitalization of $24.09 billion and a P/E ratio standing at 18.73, the company presents a picture of stability. Notably, the adjusted P/E ratio for the last twelve months as of Q1 2024 is at a lower 16.05, suggesting a potentially undervalued status in comparison to earnings.
InvestingPro Tips highlight that Global Payments is expected to see net income growth this year, reinforcing TD Cowen's positive outlook on the company's earnings potential. Additionally, the stock's RSI indicates it is in oversold territory, which could attract investors looking for entry points in a potentially undervalued stock. It's also noteworthy that Global Payments has a track record of maintaining dividend payments for 24 consecutive years, demonstrating a commitment to shareholder returns even through market fluctuations.
Investors may find further value in the fact that the company is trading near its 52-week low and has experienced a significant price drop over the last three months. This aligns with the "multiple compression" noted by TD Cowen and may signal a buying opportunity for long-term investors. For those interested in a deeper dive, there are additional InvestingPro Tips available, which can be accessed with a special offer using the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.