On Wednesday, Goldman Sachs reaffirmed its Buy rating and $132.00 price target for Global Payments (NYSE:GPN). The endorsement follows the company's Investor Day, which highlighted its strategic shift towards streamlining operations. Global Payments aims to transition from a holding company model to a more integrated operational structure. This move is accompanied by a series of product consolidations, divestitures, and technological investments intended to foster a nimbler corporate environment.
During the Investor Day, Global Payments set forth updated financial goals for the upcoming three-year period. These targets include a commitment to substantially increased capital returns, sustained operating leverage, and long-term earnings per share (EPS) growth in the low-teens percentage range. Despite the positive developments and announcements, the company's shares did not perform as well as expected following the event.
The analyst at Goldman Sachs expressed confidence in the stock, suggesting that it is currently undervalued. This perspective is based on Global Payments' continued strong performance in revenue and EPS growth. The analyst anticipates that further details regarding the company's 2025 revenue deceleration guidance, along with additional information on the extent of share repurchases factored into the EPS growth forecast, will contribute to the stock's future outperformance.
Global Payments' strategic overhaul and financial targets are part of an effort to enhance shareholder value and position the company for robust future growth. Despite the lackluster market reaction to the Investor Day presentation, the analyst's outlook remains positive, with an expectation that the stock will surpass market performance as the company's plans unfold and become more clearly defined to investors.
In other recent news, Global Payments Inc. 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 has adjusted its outlook for Global Payments, reducing the price target to $142 while maintaining a Buy rating. The firm anticipates a potential divestiture opportunity for the company towards the end of 2024 or early 2025.
Baird reiterated an Outperform rating, citing cleaner financial reporting as a key to the company's future growth. Susquehanna also affirmed a Positive rating, highlighting the benefits from the integration of EVO. Furthermore, KeyBanc has kept an Overweight rating and a $145.00 price target for Global Payments, driven by a favorable exposure to spending and a tech-enabled mix in the Merchant segment.
InvestingPro Insights
As Global Payments (NYSE:GPN) embarks on its strategic shift, real-time data from InvestingPro underscores the potential that has caught the eye of Goldman Sachs. The company is trading at a forward P/E ratio of 19.04, which indicates a valuation that may be attractive relative to its near-term earnings growth. This aligns with an InvestingPro Tip highlighting that Global Payments is trading at a low P/E ratio compared to its expected earnings growth.
Furthermore, the company's commitment to shareholder returns is evidenced by its track record of maintaining dividend payments for 24 consecutive years, a streak that is not commonly matched in the industry. In terms of profitability, the company has been profitable over the last twelve months, with a gross profit margin of 62.84%, showcasing its ability to maintain a strong hold on its operational efficiency.
Investors considering Global Payments will find additional insights with the InvestingPro product, which includes several more tips for a comprehensive investment decision-making process. For those interested in the long-term prospects of the company, it is worth noting that analysts predict Global Payments will remain profitable this year, an outlook that may provide confidence amidst the strategic changes taking place.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.