2023-03-20 13:58:02 ET
FleetCor (FLR ) rose 6% as analysts were largely positive on the announcement of a strategic review and agreement with activist D.E. Shaw that could see the company j ettisoning some businesses.
"We welcome the review of company assets and believe and potential asset sales to private or public markets buyers would be a step in the right direction for shareholder value creation," Truist analyst Andrew Jeffrey, who has a buy rating and $245 price target on FLT, wrote in a note.
FleetCor's review comes after Fidelity National Information Services ( FISV ) announced last month that i t planned to spin-off of its Merchant Solutions business , which also followed cooperation agreement with D.E. Shaw in December.
"We contend that the era of Legacy FinTech conglomerate is coming to an end," Jeffrey added in the note on Monday.
Jeffrey highlighted that FleetCor ( NYSE: FLT ) was trading at a 40% discount to pre-pandemic NTM P/E and a 20% discount to Fiserv ( FISV ) C24 P/E.
Baird analyst David Koning sees "portfolio optimization" as an opportunity for FleetCor ( FLT ), specifically the gift segment and completing its Russia divestiture. Baird has an outperform and $254 price target on FLT.
Jefferies analyst Trevor Williams, who has a buy rating and $240 price target on FLT, wasn't as positive on the strategic review, writing that he doesn't "see an obvious playbook for portfolio review, but stock is too cheap relative to its growth profile."
Williams expects there may be "dis-synergies" from selling any assets and he argues that the simplest course of action for FleetCor ( FLR ) would be to trim the number of reported segments.
FleetCor ( FLR ) was not the only fintech company moving on news of the strategic review. Global Payments ( GPN ) gained 1.8%.
Truist's Jeffrey, who has a buy rating on Global Payments, sees the company as the next in line to possibly look to streamline its business and "unlock value for shareholders after years of stagnation."
Global Payments ( GPN ) could be a "prime" acquisition for a ecommerce/omnichannel processor, though any deal would be contingent upon GPN pivoting to a merchant acquirer pure-pay through the sale of its issuer business.
Last month Gordon Haskett and Dealreporter highlighted that Global Payments ( GPN ) could be looked at as a potential activist target after after a 13F filing from Nomura, which is viewed as a counterparty for activist swap positions .
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FleetCor potential asset sales a positive, analysts say