Global Payments Stock Downgraded Amid Strategic Shifts

Global Payments (GPN) recently had its stock rating reduced by RBC Capital, moving from "Outperform" to "Sector Perform." This adjustment comes as the firm reassesses Global Payments's (GPN) latest strategic decisions, including its acquisition of Worldpay and the divestiture of its Issuer business.

RBC also slashed the price target for Global Payments (GPN), dropping it from $139 to $86. The firm cited concerns that the company's move to simplify operations has been delayed, thereby increasing the overall execution risk. RBC noted that "the strategic use of proceeds from the Issuer business sale, originally intended to streamline operations at Global Payments (GPN), has shifted towards acquiring a business with lower margins and higher volatility."

This strategic change and its financial implications led RBC to lower its rating for the stock. Investors are now being alerted to the heightened risk related to execution following these changes.

According to price targets issued over the past year by 27 analysts, the average estimate for Global Payments Inc (GPN) sits at $110.67, with projections ranging from a high of $194.00 to a low of $65.00. This average forecast implies an expected upside of 53.59% from the current stock price of $72.06.

Based on recommendations from 35 brokerage firms, Global Payments currently holds an average brokerage recommendation score of 2.4, which indicates an "Outperform" rating. (The scale ranges from 1, meaning Strong Buy, to 5, meaning Sell.)

Furthermore, the estimated one-year fair value for GPN is $124.21, suggesting an upside of 72.37% from the current price. This valuation is based on historical trading multiples, past growth patterns, and forward-looking business performance estimates.

• Full Year 2024 Adjusted Net Revenue: $9.15 billion, up 6% year-over-year.
• Adjusted Operating Margin: Increased by 40 basis points to 45% for the full year.
• Full Year Adjusted EPS: $11.55, reflecting an 11% year-over-year growth.
• Q4 2024 Adjusted Net Revenue: $2.29 billion, a 5% increase.
• Q4 2024 Adjusted Operating Margin: Improved by 40 basis points to 45.2%.
• Q4 2024 Adjusted EPS: $2.95, up 11% or 12% on a constant currency basis.
• Merchant Solutions Q4 Revenue: $1.76 billion, representing 6% growth.
• Issuer Solutions Q4 Revenue: $542 million, showing a 3% increase in constant currency terms.
• Q4 2024 Adjusted Free Cash Flow: Approximately $814 million, about 110% of adjusted net income.
• Full Year 2024 Adjusted Free Cash Flow: $2.7 billion, roughly 95% of adjusted net income.
• Capital Expenditures for 2024: $675 million, around 7% of total revenue.
• Net Leverage: Lowered to 3.2x at the end of Q4.
• Available Liquidity: $3.8 billion as of the end of 2024.
• Weighted Average Cost of Debt: 3.36%.
• Share Repurchases: 12.7 million shares bought back for $1.5 billion during 2024.

• Global Payments (GPN) achieved 6% adjusted net revenue growth for full-year 2024 and posted record adjusted operating margins alongside double-digit EPS growth.
• The company generated roughly $3 billion in adjusted free cash flow, returning $1.8 billion to shareholders.
• Its point-of-sale (POS) and software business expanded significantly, with high-teens growth in new locations, especially in the restaurant and retail sectors.
• Seventeen new client implementations were completed in Issuer Solutions in 2024, ending the year with a record 885 million traditional accounts on file.
• Operational transformations are expected to deliver over $600 million in annual run-rate operating income benefits by mid-2027, an increase from the earlier forecast of $500 million.

• Global Payments (GPN) faced unexpected foreign exchange headwinds that weighed on results despite hitting growth objectives.
• The company is exiting smaller, less scalable markets in Asia Pacific.
• Hiring slowdowns impacted the pay card business, lowering growth by nearly one percentage point.
• Corporate caution continues to suppress commercial card volume growth.
• Business transformation efforts, while positive longer-term, are causing some short-term disruptions, especially during the early part of 2025.