Saturday, 18 May 2024


Mizuho deems Global Payments’ valuation unattractive, lowers share price target By

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On Wednesday, Mizuho Securities adjusted its outlook on Global Payments Inc. (NYSE:), a leading worldwide provider of payment technology and software solutions, by reducing the share price target. The new target is set at $105.00, a decrease from the previous $129.00, while the firm maintained a Neutral rating on the company’s shares.

The adjustment comes after Global Payments’ shares have trailed the S&P 500 by a significant margin year-to-date. The underperformance is attributed to less-than-expectedmonths growth in the merchant acquiring segment and a disappointing forecast for fiscal year margin expansion. The analyst from Mizuho expressed skepticism regarding the attractiveness of Global Payments’ valuation, despite the recent underperformance.

Global Payments’ current valuation, which is approximately 30 times the last twelve months’ free cash flow, is considered high relative to its peers in the legacy payment sector. This is particularly noteworthy given that in the first quarter, the company’s free cash flow represented just over half of what management had adjusted for the free cash flow metric.

In light of these factors, Mizuho has revised its estimates and price target downward. The firm’s stance remains Neutral, indicating a cautious perspective on the stock’s near-term potential. This reevaluation reflects concerns about Global Payments’ growth prospects, which are expected to lag behind its peer group average by approximately 200 basis points.

InvestingPro Insights

As investors digest the revised outlook from Mizuho Securities on Global Payments Inc., real-time data and insights from InvestingPro offer additional context. The company’s market capitalization stands at $28.13 billion, reflecting its substantial presence in the payment technology sector. With a Price/Earnings (P/E) ratio of 21.83 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 18.74, Global Payments is trading at a valuation that suggests investors are expecting earnings growth.

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InvestingPro Tips indicate that while analysts have tempered their earnings expectations, the company’s net income is still expected to grow this year. Additionally, the Relative Strength Index (RSI) suggests that the stock is currently in oversold territory, which could signal a potential buying opportunity for contrarian investors. Moreover, Global Payments has demonstrated a…

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