Piper Jaffray: Global Payments Inc Well Positioned To Adapt To Shifts In Payment Sector

A strategic focus on software makes Global Payments Inc. GPN well positioned to capture upside as the integrated payment channel sector shifts towards tech-enabled solutions, according to analysts at Piper Jaffray.

The Analyst

Jason S. Deleeuw upgraded Global Payments from Neutral To Overweight and raised the stock’s price target from $121 to $131, implying roughly 16 percent upside.

The Thesis

To adapt to a changing sector, GPN plans to shift its revenue focus to higher-margin, tech-enabled ecommerce solutions, Deleeuw said in a Friday note. (See the analyst’s track record here)

“Those solutions offer higher-margin, recurring/predictable revenue with stickier customer retention thanks to value-added payments integration with business management solutions and reporting/data/analytics insights,” he said.

GPN’s strategy of partnering with smaller and more specialized companies such as Openedge and ezidebit has created synergies, leading to organic M&A growth and differentiating GPN in a growing and changing industry, the analyst said.

“We expect GPN’s strong competitive positioning will sustain a higher rate of L-T organic growth than peers and warrants a premium valuation.”

Price Action

At time of publication, shares of GPN were trading up 0.7 percent at $112.26.

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