A strategic focus on software makes Global Payments Inc. (NYSE:GPN) well positioned to capture upside as the integrated payment channel sector shifts towards tech-enabled solutions, according to analysts at Piper Jaffray.
The Analyst
Jason S. Deleeuw upgraded Global Payments from Neutral To Overweight and raised the stock’s price target from $121 to $131, implying roughly 16 percent upside.
The Thesis
To adapt to a changing sector, GPN plans to shift its revenue focus to higher-margin, tech-enabled ecommerce solutions, Deleeuw said in a Friday note. (See the analyst’s track record here)
“Those solutions offer higher-margin, recurring/predictable revenue with stickier customer retention thanks to value-added payments integration with business management solutions and reporting/data/analytics insights,” he said.
GPN’s strategy of partnering with smaller and more specialized companies such as Openedge and ezidebit has created synergies, leading to organic M&A growth and differentiating GPN in a growing and changing industry, the analyst said.
“We expect GPN’s strong competitive positioning will sustain a higher rate of L-T organic growth than peers and warrants a premium valuation.”
Price Action
At time of publication, shares of GPN were trading up 0.7 percent at $112.26.
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