Global Payments Likely To Gain From Compelling Industry Valuations & Strategic Focus On M&A: Analyst

  • Morgan Stanley analyst James Faucette upgraded Global Payments Inc GPN from Equal-Weight to Overweight and raised the price target from $124 to $135.
  • Compelling valuations amidst a possible competitive shift from higher rates and lower VC investment make payments increasingly attractive. 
  • Since 2019, there has been a high degree of dispersion across the payments group, with stocks like Visa Inc V and Mastercard Inc MA outperforming, and GPN, PayPal Holdings, Inc PYPL, and Fidelity National Information Services, Inc FIS underperforming by 50-90%. 
  • The analyst believes V and MA should benefit from the ongoing travel recovery and more recession resilience than the market appreciates. In contrast, the “deal stocks” should benefit from higher rates, reduced VC investment, and easing competitive threats. 
  • While each deal stock is trading at discounted multiples, the analyst found GPN particularly compelling.
  • The analyst thinks GPN’s higher merchant exposure could outgrow the banking businesses at FIS and Fiserv, Inc FISV.
  • The analyst is also optimistic about GPN’s strategic focus on M&A, which can help it defend against the longer-term threat of share loss. 
  • Price Action: GPN shares traded higher by 3.33% at $111.24 on the last check Tuesday.
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