Global Payments ( NYSE: GPN ) stock gapped down 7.1% in Monday morning trading as investors assessed the company's Q3 profit that matched the average Wall Street estimate along with full-year guidance that was reaffirmed.
Truist analyst Andrew Jeffrey, though, reiterated Global Payments ( GPN ) as a Buy as the credit card and payment processing firm is positioned for high-single long-term organic revenue growth as well as modest operating leverage, he wrote in a note.
Still, the company's pending acquisition of EVO Payments ( EVOP ) could add pressure to its price-to-earnings ratio as mergers and acquisitions likely won't take hold after the takeover closes in Q1 2023 , Jeffrey warned. In order for Global ( GPN ) to generate outsized returns, the company may "be forced to either break Global apart, creating a pure-play Merchant business, or sell the co to a larger Legacy FinTech or private equity," he added.
That kind of shakeup could occur after the completion of its EVO ( EVOP ) acquisition since the ladder brings fast-growing ePayments markets such as Poland and Mexico, making it a more attractive to a potential suitor, the note said. Seeking Alpha contributor InvestOh Trader, who views GPN as a Buy, made similar remarks saying the potential acquisition of EVOP will make GPN more appealing due to its accelerating total addressable market .
In turn, Jeffrey has lowered his 2023 EPS estimate to $10.56 from $10.71, compared with the $10.73 consensus.
Jeffrey's Buy rating agrees with the average Wall Street rating of Buy, though disagrees with the Quant's Hold rating.
Earlier, Global Payments Non-GAAP EPS of $2.48 in-line, revenue of $2.28B beats by $240M .
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Global Payments stock slides as investors weigh Q3 results; still called a Buy at Truist