KeyBanc trims Global Payments stock price target, retains Overweight rating post-Investor Day By Investing.com

On Wednesday, KeyBanc made adjustments to its financial outlook on Global Payments Inc. (NYSE:), a leading worldwide provider of payment technology and software solutions. The firm’s analyst reduced the price target on the company’s shares to $135.00 from the previous target of $145.00. Despite this change, the analyst maintained an Overweight rating on the stock.

The revision followed Global Payments’ investor day held on September 24, 2024, where the company revealed a significant operational transformation initiative. The event also provided detailed insights into the financial profiles of the Merchant Solutions subsegment and laid out preliminary guidance for fiscal year 2025, along with an updated medium-term model outlook.

The preliminary guidance for fiscal year 2025, which is considered a “transition year,” indicated revenue and adjusted earnings per share (EPS) growth below Wall Street’s expectations. This is attributed to the reallocation of resources within the Merchant Solutions segment to support the ongoing operational transformation.

Despite the conservative outlook for fiscal year 2025, KeyBanc expressed optimism for the fiscal years 2026 and 2027. The medium-term outlook suggests accelerating revenue growth to the mid-single to high-single digit range, with the potential for incremental margin expansion and low-teens adjusted EPS growth. The company also presented a refreshed capital allocation strategy.

After the investor day, market focus is expected to shift towards the conservative nature of the medium-term outlook and the company’s ability to execute its transformation initiatives, especially in go-to-market strategies.

KeyBanc’s positive stance on Global Payments is driven by the company’s favorable exposure to spending trends and a tech-enabled mix in the Merchant segment.

The valuation also takes into account the expected mid-single-digit-plus revenue growth and low-double-digit adjusted EPS growth. As a result of the anticipated “transition year,” the firm has adjusted its fiscal year 2025 estimates downward, leading to the lowered price target, which is now based on 10.1 times fiscal year 2025 EBITDA.

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