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Jefferies: M&A, Tax Reform Drive Vantiv Upside

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Jefferies: M&A, Tax Reform Drive Vantiv Upside
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Payment processor Vantiv Inc (NYSE: VNTV) notched an upgrade and price target increase Thursday from Jefferies. 

The Analyst

Jefferies analyst Ramsey El-Assal upgraded Vantiv from Hold to Buy and increased the price target from $72 to $94.

The Thesis

The WORLDPAY GRP PLC (OTC: WPYGY) acquisition brings Vantiv a better business mix and dilutes some existing problematic concentrations, analyst El-Assal said in a note. (See El-Assal's track record here.) 

The deal could help drive up volume from higher-growth digital and integrated distribution channels while also expanding Vantiv's footprint into  international markets, the analyst said. 

Vantiv could see upside from incremental merger synergies, according to Jefferies.

Vantiv's merger cost synergy targets are conservative, El-Assal said, and Jefferies projects additional upside in revenue synergies from cross-selling Worldpay's ECOM solutions in the U.S.

Vantiv is also projected to benefit from the potential passage of U.S. tax reform, the analyst said. 

Vantiv shares deserve a premium valuation due to the improved mix and synergy-driven earnings beats, El-Assar said. Tax reform is expected to boost earnings per share by 7 percent, making the valuation more compelling, he said. 

The Price Action

Vantiv shares are up over 25 percent year-to-date, with interest in the stock perking up following the Worldpay deal. 

Vantiv was up 1.83 percent at $74.94 at the time of publication. 

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Latest Ratings for VNTV

DateFirmActionFromTo
Jan 2018Stephens & Co.Initiates Coverage OnOverweight
Jan 2018RBC CapitalUpgradesOutperformTop Pick
Dec 2017JefferiesUpgradesHoldBuy

View More Analyst Ratings for VNTV
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Posted-In: Jefferies Ramsey El-AssalAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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