Investing.com -- Raymond James upgraded Shift4 Payments to "Strong Buy" from "Outperform" following the recent sell-off in the stock and the "underappreciated" benefits of its recent Global Blue acquisition.
The firm maintained its $140 price target, arguing that the current valuation does not reflect the company’s growth potential. Shift4 shares have fallen 29% since its most recent earnings report, compared to a 7% decline in the S&P Mid-Cap 400 index.
Raymond James believes the market has not fully recognized the strategic value of Shift4’s acquisition of Global Blue, a payments technology company specializing in tax-free shopping and dynamic currency conversion.
The deal was largest in Shift4’s history and was announced just months before the departure of its founder and CEO.
Despite investor concerns, the firm sees significant long-term benefits, including an estimated $80 million in additional revenue by 2027.
In a more optimistic scenario, revenue synergies could reach $160 million. The acquisition also positions Shift4 to expand its services across hotels and stadiums while capitalizing on a growing trend toward VAT refund programs in markets such as Saudi Arabia and potentially the U.K.
Raymond James noted that Shift4’s initial 2025 revenue guidance appeared cautious, which may have disappointed some investors. However, the firm believes the company is now providing more conservative projections, allowing room for unexpected economic challenges.
While the company forecasts organic revenue growth of over 20% in 2025, Raymond James expects a stronger performance, driven by international expansion and strong sales momentum. The firm also sees potential for better-than-expected EBIDTA, given that current analyst estimates assume a lower-than-usual margin.
Shift4 now trades at approximately nine times its estimated 2026 EBITDA, making it one of the most attractive risk-reward opportunities among fintech companies. RJ also pointed out that the company's strong free cash flow growth, expected to exceed 20%, further supports its bullish stance.
Despite the leadership transition, Raymond James said it does not expect significant operational changes.
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