On Monday, Raymond (NS:RYMD) James maintained a positive outlook on Corpay (NYSE:CPAY), with analyst John Davis raising the price target slightly to $434 from $431, while reaffirming an Outperform rating on the company's shares. The adjustment reflects confidence in Corpay's prospects for the year ahead, building on its robust performance in the previous year.
Davis's commentary highlighted the favorable position of Corpay as it enters 2025, noting that the company's shares had already seen a 20% increase compared to the 11% rise of the equal-weighted S&P 500. He identified multiple tailwinds for Corpay, including a continued rebound in the Fleet segment and substantial growth in Brazil. Additionally, improvements in the Corporate Payments partner channel and a recovery in lodging due to system issues are anticipated to drive organic growth back to over 10%, a significant increase from the 6-7% observed in 2024.
The analyst also pointed to the expected positive impact of recent acquisitions. The integration of Paymerang and GPS is projected to contribute approximately 300 basis points to top-line growth. Davis suggested that the revenue and cost synergies from these deals might even surpass expectations, as they align well with Corpay's core competencies.
The optimistic stance is further bolstered by the potential for accelerating growth across all segments, the likelihood of successful deal integrations, and the prospect of further mergers and acquisitions. These factors, according to Davis, could enhance the company's earnings multiple.
Despite these growth prospects and anticipated mid-teens or higher earnings per share (EPS) growth, Corpay's stock is still trading at around 13 times the estimated non-GAAP EPS for 2026. This valuation represents a roughly two-turn discount compared to the equal-weighted S&P 500. Davis concluded by reinforcing Corpay's status as one of Raymond James' top picks for 2025, suggesting that the company's stock may be undervalued given its growth potential.
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