On Wednesday, Baird maintained a positive stance on shares of Global Payments (NYSE:GPN), reiterating an Outperform rating and a $150.00 price target. The firm's assessment is based on the potential for a 10-15% earnings per share (EPS) growth in the upcoming years. The focus for investors is expected to be on the sustainability of Merchant share and margins.
The analyst from Baird highlighted the attractiveness of Global Payments, citing its valuation and growth prospects. The firm believes that a clearer financial presentation from the company would benefit investors. This includes limiting EPS add-backs, simplifying the balance sheet by avoiding seller notes and convertible notes, and providing more straightforward subunit reporting.
The current outlook for Global Payments is optimistic, with the suggestion that if the company were to cease adding back merger-related and severance expenses, the EPS could potentially be $12.00 by 2025. Furthermore, the analyst projects that once one-off expenses diminish, the company could experience an even higher EPS growth rate of 15-20% from this adjusted lower base.
The financial institution expressed that these improvements in reporting would make the stock more appealing to investors, who would value a more transparent and simplified financial overview. The forecasted growth rates reflect the firm's confidence in Global Payments' ability to increase its profitability and market position in the coming years.
In other recent news, Global Payments reported a 6% increase in adjusted net revenue for the second quarter, reaching $2.32 billion. The Merchant Solutions segment saw an 8% increase to $1.8 billion, while the Issuer Solutions segment experienced a 4% rise to $527 million. Citi maintains a Buy rating on Global Payments, suggesting that the upcoming analyst day could provide clarity on the company's growth potential. Susquehanna affirmed a Positive rating, highlighting the benefits from the integration of EVO.
TD Cowen maintained a Buy rating, emphasizing the upcoming Investor Day as a pivotal moment. BMO Capital increased the price target for Global Payments, following a recovery in Merchant Solutions margins. Stephens revised its price target, noting the company's in-line revenues and margin beat.
InvestingPro Insights
Recent insights from InvestingPro suggest a cautiously optimistic outlook for Global Payments (NYSE:GPN). Analysts anticipate that net income for the company is expected to grow this year, which aligns with Baird's analysis of the company's earnings per share growth potential. Additionally, the company's strong performance over the last three months, with a price total return of 21.82%, underscores its recent market success. These positive indicators are further supported by Global Payments' long-standing consistency in dividend payments, having maintained them for 24 consecutive years.
From a valuation standpoint, Global Payments is trading at an adjusted P/E ratio of 16.98, which is relatively low given its near-term earnings growth potential. This could signify an attractive entry point for investors, as highlighted by Baird's Outperform rating and $150.00 price target. The company's revenue growth also remains robust, with a 6.63% increase over the last twelve months as of Q2 2024, demonstrating its ability to expand its financial base.
For those seeking a deeper dive into the financial health and projections for Global Payments, InvestingPro offers additional tips and insights that could further inform investment decisions. In total, there are 17 more InvestingPro Tips available, which can be accessed for a comprehensive analysis of the company's financial outlook.
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