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Global Payments stock under pressure as FY25 growth trails Street estimates - RBC

EditorEmilio Ghigini
Published 09/25/2024, 06:44 AM
GPN
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On Wednesday, RBC Capital maintained a positive stance on Global Payments Inc. (NYSE:GPN) stock, reiterating an Outperform rating with a steady price target of $158.00. The firm's commentary highlighted the preliminary financial guidance for fiscal year 2025, which anticipates mid-single-digit adjusted revenue growth.

This forecast falls short of the approximately 7% growth estimated by analysts. Despite this, expectations are set for growth to pick up pace in fiscal years 2026 and 2027, driven by a strategic shift towards faster-growing products and solutions.

The payment processing company has outlined several key strategies during its Investor Day. Among these is the target to achieve around $500 million in operational savings over the mid-term. This effort is part of a broader plan to optimize the company's efficiency and financial performance.

Additionally, Global Payments is planning to enhance shareholder value through significant capital returns. The company has committed to returning $7.5 billion to its shareholders through a combination of stock buybacks and dividends. This move is indicative of the company's confidence in its financial health and its commitment to rewarding its investors.

In a move to streamline operations and focus on core growth areas, Global Payments has also identified strategic assets worth $500 to $600 million for potential divestiture or sale. This decision is aimed at refining the company's asset portfolio and concentrating on more profitable and strategic areas of the business.

The firm's analysis suggests that while the immediate revenue growth projections may not meet current market expectations, the long-term outlook for Global Payments appears robust, underpinned by strategic initiatives and a strong commitment to operational efficiency and shareholder returns.

InvestingPro Insights


As RBC Capital maintains an optimistic view on Global Payments Inc., the financial health and stock performance of the company provide additional context for investors. According to InvestingPro data, Global Payments has a market capitalization of $26.42 billion, with a P/E ratio that has adjusted to a more attractive 15.73 in the last twelve months as of Q2 2024. This reflects a company that is trading at a low price relative to its near-term earnings growth potential. The company's revenue growth over the same period was 6.63%, indicating a steady upward trajectory.

InvestingPro Tips suggest that Global Payments is expected to see net income growth this year, which aligns with the company's strategic initiatives to enhance efficiency and financial performance. Moreover, the company has successfully maintained dividend payments for 24 consecutive years, demonstrating a reliable commitment to shareholder returns. Analysts predict the company will remain profitable this year, with a notable profitability over the last twelve months.

For investors seeking more detailed analysis, there are additional InvestingPro Tips available for Global Payments at https://www.investing.com/pro/GPN. These insights could provide further clarity on the company's financial outlook and help inform investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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