Bullish Analyst Sees 25% Upside In Shift4 Payments, Calls Growth Strategy Constructive - Shift4 Payments (NYSE:FOUR)

Piper Sandler analyst Clarke Jeffries maintained a Buy rating on Shift4 Payments Inc FOUR and set a price target of $85.00.
The analyst believes Shift4 is well positioned for solid results through 2023 and poised to show elite growth over the medium term (>2x top line over three years) while still producing margin expansion.
He sees the growth driven by continued execution across three growth strategies of the end-to-end processing initiative across gateway volumes, new verticals outside the high-growth core, and international expansion. These strategies present company-specific drivers for fundamentals based on gaining market share, growing economics with existing customers, and entering new markets.
The gateway sunset initiative, announced in 2022, is a multiyear effort to convert the company's heritage gateway business ($150 billion+ volume) to its end-to-end processing solution ($70 billion+); this consolidates four or five different vendors down to one and lowers the cost for merchants.
In 2020, Shift4 had roughly 90% of the company's payment volumes from restaurant & hotel customers. Today that number is closer to ~50%, with the company less than two years into the expansion into five new verticals: travel, sports, non-profits, gaming, & 'sexy tech.'
New verticals significantly improved Shift4 sentiment over 2022, as new vertical volumes grew >4x during 2022.
While net new wins in the high-growth core could still significantly contribute to 2023E E2E volume more than new verticals, that could change in 2024.
FOUR has primarily served merchants within the U.S., but the company has called international expansion its #1 capital allocation and growth priority.
The company started processing its first international volumes in Q4. The planned acquisition of Finaro is crucial to the company's global expansion. The deal should provide FOUR with a cross-border commerce platform with processing capabilities & licenses in Europe, Southeast Asia, and Japan.
Price Action: FOUR shares traded lower by 2.21% at $67.63 on the last check Tuesday.

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