Global Payments Inc (NYSE: GPN) has done well over the past thirty days but a Morgan Stanley analyst is convinced it’s not done pleasing its shareholders just yet.
Global Payments stock could hit $135 a share
James Faucette now rates this financial technology company at “overweight”. His price objective of $135 suggests another 25% upside on its previous close. He’s bullish primarily on a decline in competition due to higher interest rates.
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Capital going to fintech upstarts has fallen significantly with fintech VC funding down 46% in `22 and 72% in Q4. We expect this to persist so long as rates remain higher, especially as newer fintechs are challenged by rising profit expectations.
The Atlanta-headquartered firm is expected to earn $2.35 a share in its current financial quarter versus $2.03 a year ago. Global Payments stock is still down 50% versus its record high in April 2021.
GPN is better positioned to weather a recession
Global Payments has a bigger merchant exposure that may not be hit as bad in a recession as expected, the analyst added. He likes the multinational also for its focus on mergers and acquisitions.
We believe M&A is the most efficient use of capital as it’s the most direct way to improve competitive positioning. GPN has been the most-front amongst the deal stocks recently and has a history of consistently strong execution on deal.
Despite the recent rally, Faucette sees Global Payments stock that pays a near 1.0% dividend yield as attractively valued.
In August, Invezz reported GPN to have bought EVO Payments Inc for $4.0 billion in cash.
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