Mizuho Securities has adjusted its outlook on Global Payments Inc. (NYSE: NYSE:GPN), a leading worldwide provider of payment technology and software solutions, by reducing the price target to $100 from the previous $105.
The firm maintained a Neutral rating on the stock.
The adjustment follows Global Payments' recent analyst day where management provided new insights into Merchant sub-segments and set targets for 2025 and the medium term. The company described 2025 as a transitional year, anticipating a pickup in growth for 2026 and 2027.
Mizuho has updated its model for Global Payments, with the new estimates for 2025 reflecting a 5% increase in revenue growth, nearly 50 basis points of margin expansion, and an 11% rise in earnings per share (EPS).
These figures align closely with the guidance provided by Global Payments. For the years 2026 and 2027, Mizuho's projections for revenue growth and margin expansion are consistent with the company's outlook. However, the firm forecasts a higher EPS growth in the mid-teens, compared to the low-teens guidance from Global Payments, supported by robust share buybacks.
The revised price target of $100 is based on 17 times Mizuho's 2026 EPS estimate. This valuation reflects a significant discount compared to historical valuations and those of legacy payment peers. The discount is attributed to concerns over market share and a tepid outlook for 2025.
In other recent news, Global Payments Inc. has been the subject of several significant developments. The company has announced a strategic realignment and operational transformation, aiming to drive sustainable growth and long-term value creation.
A notable aspect of this initiative is the projected return of $7.5 billion to shareholders over the next three years. As part of this transformation, the company has outlined its financial outlook for the fiscal years 2025 to 2027, forecasting mid-single-digit to high-single-digit revenue growth and low-teens earnings per share growth.
Several analyst firms have adjusted their outlook on Global Payments. KeyBanc reduced the company's stock price target but maintained an Overweight rating, while Monness Crespi Hardt also cut its price target but held onto a Buy rating.
On the other hand, Seaport Global Securities downgraded the stock from Buy to Neutral due to concerns about growth projections. B.Riley and BMO Capital Markets also revised their price targets for Global Payments, both firms retaining their Buy and Market Perform ratings, respectively.
InvestingPro Insights
Global Payments Inc. (NYSE:GPN) presents an intriguing investment case in light of recent developments and financial metrics. According to InvestingPro data, the company's market capitalization stands at $25.7 billion, with a P/E ratio of 18.42, which drops to 15.31 when adjusted for the last twelve months. This relatively low P/E ratio, especially when compared to the company's PEG ratio of 0.22, suggests that the stock might be undervalued relative to its growth potential.
InvestingPro Tips highlight that Global Payments is expected to grow its net income this year and has maintained dividend payments for 24 consecutive years, demonstrating financial stability. The company's revenue for the last twelve months reached $9.9 billion, with a solid gross profit margin of 62.84% and an operating income margin of 24.29%.
Despite Mizuho's cautious stance, it's worth noting that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. This aligns with the firm's projections of EPS growth in the mid-teens for 2026 and 2027.
Investors should be aware that the stock has taken a significant hit over the last week, with a 1-week price total return of -8.97%. However, this could present a buying opportunity, especially considering that InvestingPro's fair value estimate for GPN is $133.35, substantially higher than the current trading price.
For those interested in a deeper analysis, InvestingPro offers 5 additional tips for Global Payments, providing a more comprehensive view of the company's prospects and challenges.
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