On Friday, BMO Capital Markets adjusted its outlook on Corpay (NYSE: CPAY) shares, increasing the price target to $400 from the previous $390 while maintaining an Outperform rating on the shares. The revision follows Corpay's pre-announced third-quarter results, which showed robust performance in several key areas of the company's operations.
Corpay's third-quarter report highlighted a 28% gross sales growth in its Corporate Payments division and an impressive 18% year-over-year revenue increase in Brazil. The growth in Brazil was attributed to strong sales trends across toll and non-toll products, as well as Zapay, a digital payment platform. The analyst from BMO Capital expressed optimism about the company's prospects, citing these figures as indicators of Corpay's strength.
In addition to the positive sales figures, BMO Capital noted that there are stabilizing trends at NAF & Lodging, aligning with previous guidance. This stability is seen as a positive sign for the company's future performance.
The analyst's outlook for Corpay is buoyant, with expectations of a significant acceleration in the fourth quarter. Based on the company's current trajectory, BMO Capital anticipates Corpay to achieve long-term revenue growth in the low double digits (LDD%) and mid-to-high teens growth in earnings per share (EPS) by 2025.
In light of these projections, BMO Capital has slightly increased its out-year EPS estimate by less than 1%. The new price target of $400 reflects the firm's confidence in Corpay's ability to continue its growth trend and deliver on its financial targets in the coming years.
In other recent news, Corpay announced Q3 financial results, showing revenue of approximately $1.029 billion and earnings per share of $3.90. This follows Q2 performance, where the company exceeded earnings and revenue estimates, reporting adjusted earnings per share of $4.55 and revenue of $975.7 million.
However, Corpay's Q3 guidance fell short of analysts' expectations, projecting an adjusted EPS of $4.90-$5.00 and revenue between $1.015-1.035 billion.
Corpay also recently completed the acquisition of Paymerang, expected to generate an additional $25-35 million in revenue for the remainder of 2024. In terms of analyst assessments, Mizuho (NYSE:MFG) maintained a Neutral rating on Corpay, while CFRA raised its price target to $385, maintaining a Buy rating.
Wolfe Research adjusted its rating from Underperform to Peer Perform, recognizing the company's long-term growth prospects. These are among the recent developments for Corpay.
InvestingPro Insights
The recent analysis by BMO Capital Markets aligns well with several key metrics and insights from InvestingPro. Corpay's strong performance is reflected in its market capitalization of $24.06 billion and a P/E ratio of 24.74, indicating investor confidence in the company's growth prospects.
InvestingPro Tips highlight that Corpay has been profitable over the last twelve months, with analysts predicting continued profitability this year. This supports BMO's optimistic outlook on the company's future earnings. Additionally, the tip noting that Corpay has seen a strong return over the last three months is consistent with the reported 21.01% price total return over the same period.
The company's robust financial health is further evidenced by its impressive gross profit margin of 78.36% and operating income margin of 44.5% for the last twelve months as of Q2 2024. These figures underscore Corpay's ability to maintain profitability while pursuing growth strategies.
It's worth noting that InvestingPro offers 8 additional tips for Corpay, providing investors with a more comprehensive analysis of the company's financial position and market performance.
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