On Tuesday, DA Davidson maintained a positive stance on Shift4 Payments (NYSE:FOUR), reiterating a Buy rating and a $96 price target. The firm's optimism is based on the company's provided financial guidance for 2024, which anticipates a year-over-year growth in net revenue between 38% and 44%, reaching $1,300 million and $1,350 million, and a 38%-47% growth in adjusted EBITDA to $635 million-$675 million.
The guidance provided by management has surpassed DA Davidson's prior forecasts and is well-aligned with consensus expectations. In response to the company's quarterly update, DA Davidson has increased its adjusted EBITDA predictions for 2024 and 2025 by 3% and 1%, respectively.
For 2024, the firm now projects a 36% year-over-year increase in net revenue to $1,309M. This figure accounts for an estimated $100M-$105M in net revenue from acquisitions completed in 2023, which, when excluded, suggests an organic revenue growth of 27%-29%.
DA Davidson forecasts a 40% year-over-year rise in adjusted EBITDA to $646M for 2024, with related margins expected to grow by 40 basis points year-over-year to 49.3%. The reiteration of the Buy rating on Shift4 Payments comes with a valuation based on an enterprise value of 13 times the firm's 2025 adjusted EBITDA forecast of $778M. This valuation is noted to be conservative compared to the average of around 16 times since the company's IPO in mid-2020.
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