UPDATE: J.P. Morgan Downgrades Global Payments on Little Room for EPS Growth Acceleration

In a report published Wednesday, J.P. Morgan analyst Tien-tsin Huang downgraded Global Payments GPN from Overweight to Neutral, but raised the price target from $48.00 to $55.00.

In the report, J.P. Morgan noted, “GPN is the cheapest merchant processor in our coverage, trading at a forward price-to-earnings ratio in the low teens versus peers in the mid-teens or higher. Given uneven results fueled by a challenging business mix (Canada regulation risk, high U.S. ISO channel exposure at a low contribution margin, and low growth prospects in Asia absent new distribution), we see little room for EPS growth acceleration absent a new deal or acquisition. We recognize Canada growth will improve in FY14 from pricing adjustments related to Visa/MasterCard fee increases, but this is a transient issue that will temporarily mask a challenging end market. Without a new deal or acquisition in place, we think the stock will remain range bound and we downgrade shares to Neutral as a result and favor faster growth processors like VNTV, EVTC and HPY instead.”

Global Payments closed on Tuesday at $47.64.