On Thursday, BMO Capital Markets adjusted its outlook on shares of Global Payments (NYSE:GPN), a leading worldwide provider of payment technology and software solutions. The firm increased its price target on the stock to $125.00, up from the previous target of $122.00. The analyst maintained a Market Perform rating on the company.
The revision follows Global Payments' third-quarter earnings, which were seen as satisfactory relative to the modest expectations from the investment community. The company's announcement of the AdvancedMD sale was highlighted as a positive development, potentially offering upside to near-term capital return.
The report noted a slight deceleration in organic growth quarter-over-quarter, now trending towards the lower end of the full-year 2024 guidance. However, the analyst pointed out that Global Payments' year-end 2024 organic growth exit rate is expected to surpass the roughly 5% rate projected in the fiscal year 2025 guidance. This projection provides additional confidence for the company's performance in the upcoming year.
Despite these positive indicators, concerns were expressed regarding the company's ongoing transformation efforts. The analyst expressed skepticism about these initiatives leading to a considerable acceleration in fundamental revenue growth for the years 2026 and 2027.
In light of the recent developments and future projections, BMO Capital Markets raised its out-year estimates for Global Payments by 1-2%. This adjustment is reflected in the new price target of $125.00, indicating a modest but positive reassessment of the company's value by the firm.
InvestingPro Insights
Building on BMO Capital Markets' analysis, recent data from InvestingPro offers additional context for Global Payments' (NYSE:GPN) financial position and market performance. The company's market capitalization stands at $26.29 billion, reflecting its significant presence in the payment technology sector.
Global Payments has demonstrated solid profitability, with a gross profit margin of 62.84% over the last twelve months as of Q2 2024. This aligns with the company's ability to maintain strong financial performance, as noted in the BMO report. Moreover, the company's revenue growth of 6.63% over the same period supports the analyst's observation of organic growth, albeit at a more modest pace.
InvestingPro Tips highlight that Global Payments is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.23. This could suggest that the stock is potentially undervalued, which may be of interest to investors considering BMO's increased price target.
Another noteworthy InvestingPro Tip is that Global Payments has maintained dividend payments for 24 consecutive years, underscoring the company's commitment to shareholder returns. This consistent dividend history may provide additional context to the potential for increased capital return mentioned in the BMO analysis.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide further insights into Global Payments' financial health and market position.
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