Global Payments stock target cut by B.Riley, retains Buy rating

B.Riley has adjusted its outlook on Global Payments (NYSE: NYSE:GPN), reducing the price target to $194 from the previous $204 while still maintaining a Buy rating on the stock.

The firm's analyst cited the current mispricing of the shares in relation to the company's historical performance and the overall market as a reason for the continued positive rating.

The analyst believes that Global Payments has a favorable three-year outlook at the current valuation level. The company's early presentation of its 2025 outlook and key performance indicators (KPIs) was seen as a cautious yet necessary step.

Global Payments is expected to maintain mid-single-digit or better revenue growth, double-digit earnings per share (EPS) growth, margin expansion, and significant capital allocation to share repurchase over the next three years.

The revised price target of $194 is based on a 15 times price-to-earnings (P/E) multiple applied to the firm's 2025 EPS estimate. This adjustment reflects a slight change in estimates while reiterating the Buy recommendation for Global Payments.

In other recent news, Global Payments Inc. has seen a flurry of analyst adjustments following its Investor Day. BMO Capital Markets revised its price target for the company from $126 to $122, maintaining a Market Perform rating.

This was due to Global Payments' 2025 guidance falling short of market expectations and a lack of reaffirmation for its 2024 forecast. The company's capital management approach, however, was viewed positively, with plans for increased stock buybacks and potential upside from asset disposals.

Meanwhile, William Blair downgraded Global Payments from Outperform to Market Perform due to concerns over long-term organic revenue growth. TD Cowen, despite reducing the company's stock target to $122, maintained a Buy rating, expressing optimism about the company's long-term potential. RBC Capital also maintained an Outperform rating, even though Global Payments' growth projections for 2025 trailed their estimates.

BTIG downgraded Global Payments from Buy to Neutral due to concerns over the company's ability to expedite growth in the coming years. Conversely, Goldman Sachs reaffirmed its Buy rating, expressing confidence in the stock based on Global Payments' continued strong performance in revenue and earnings per share growth. Citi adjusted its outlook for Global Payments, reducing the price target to $142 while maintaining a Buy rating.

InvestingPro Insights

Recent data from InvestingPro underscores the potential that B.Riley sees in Global Payments (NYSE: GPN). With a market capitalization of $26.42 billion and a P/E ratio of 19.04, the company appears to be trading at a low P/E ratio relative to its near-term earnings growth. This aligns with the analyst's view of the stock being mispriced. The adjusted P/E ratio for the last twelve months as of Q2 2024 further supports this, coming in at 15.73. Moreover, Global Payments has maintained dividend payments for 24 consecutive years, which may appeal to income-focused investors, with the most recent dividend yield being 0.96%.

InvestingPro Tips suggest that net income is expected to grow this year, and analysts predict the company will be profitable, which is consistent with the company being profitable over the last twelve months. With a solid revenue growth of 6.63% over the last twelve months as of Q2 2024 and an operating income margin of 24.29%, Global Payments seems to be on a path that could justify the optimism reflected in the analyst's three-year outlook.

For investors seeking more detailed analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/GPN, which provide further insights into Global Payments' financial health and future prospects.

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