Global Payments Inc. (GPN, Financial) has announced a strategic move to acquire Worldpay in a deal valued at $22.7 billion. As part of this transition, Global Payments will also divest its Issuer Solutions segment for $13.5 billion. The company anticipates that the combined efforts from these transactions, which include projected synergy benefits, will result in an addition of $1.6 billion to its EBITDA, while netting a consideration of $10.75 billion.
BTIG has commented on the stock's negative reaction, highlighting that existing investors were likely attracted to Global Payments for its low-price-earnings ratio and capital return strategy, with expectations of growth aligned with the Investor Day agenda from September. The company's current decision to scale back its capital return approach and increase its leverage to 3.5 times for an acquisition expected to modestly boost growth introduces potential execution risks, particularly under current uncertain macroeconomic conditions.
The financial firm maintains a Neutral rating on the shares, indicating a cautious stance on Global Payments' strategic shift and the challenges it may face in integrating Worldpay while managing its increased financial obligations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 30 analysts, the average target price for Global Payments Inc (GPN, Financial) is $124.33 with a high estimate of $194.00 and a low estimate of $85.00. The average target implies an upside of 77.11% from the current price of $70.20. More detailed estimate data can be found on the Global Payments Inc (GPN) Forecast page.
Based on the consensus recommendation from 37 brokerage firms, Global Payments Inc's (GPN, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Global Payments Inc (GPN, Financial) in one year is $124.43, suggesting a upside of 77.25% from the current price of $70.2. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Global Payments Inc (GPN) Summary page.
