6 Reasons For Upside Potential In FleetCor

Barclays’ Darrin D. Peller believes FleetCor Technologies, Inc. FLT is well positioned entering 2017, with upside potential driven by the STP acquisition, Comdata, Speedway, international expansion, incremental partnerships and improved comps on FX, gas and other macro drivers.

Peller maintained an Overweight rating on the company, while raising the price target from $180 to $190.

Upside Drivers

The analyst mentioned that STP now offers toll tags across about 250 parking garages, while it's also testing tags to buy fuel at Shell stations across Brazil.

“Coupled with the government doubling the number of private roads in Brazil over the next five years and potential pricing opportunities, we expect STP will maintain its 1H double-digit top-line run rate for the FY and grow in the teens for the foreseeable future,” Peller stated.

Conservative Outlook

The analyst believes the FleetCor Technologies’ accretion guidance continues to be conservative and the 2017 earnings could drive upside.

“Speedway represents the fifth largest portfolio in the US and will represent the third largest in FLT's portfolio,” the analyst noted, while pointing out that “Comdata is expected to grow at a 10 percent rate over the medium term as FLT has found more opportunities to go down market where there is a superior margin profile relative to up market accounts.”

In addition, demand for corporate payments continues to be robust and is expected to continue to grow in the high teens through 2017.

The EPS estimate for 2017 has been raised from $7.72 to $8.20.

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