UPDATE: Nomura Downgrades Global Payments on Valuation

In a report published Wednesday, Nomura analyst Tulu Yunus downgraded the rating on Global Payments GPN from Buy to Neutral, but raised the price target from $57.00 to $66.00. In the report, Nomura noted, “We are upgrading Total System Services (TSS) to Buy from Neutral based on our view that investors will increasingly focus on the largest, fastest-growing, and highest-margin businesses (North America and NetSpend) where we see upside to expectations. The company as a whole is at a point where it will see accelerating revenue and EPS growth, as it turns the page on price pressure and lost business headwinds, enjoys margin expansion, and repurchases shares (sooner than expected). Our TP goes to $38 from $29 (based on the current forward multiple of 16x on our above-consensus 2015 EPS estimate of $2.42). We are also downgrading Global Payments (GPN) to Neutral from Buy. Our TP goes from $57 to $66 (based on 15x our 2015 FY EPS estimate of $4.41). Our downgrade is based largely on valuation. Our bullish investment case (relief from Canada, margin upside, and accelerated capital return) has largely been played out and we see a more balanced risk/reward to owning GPN shares at these levels.” Global Payments closed on Tuesday at $63.36.