Analysts At Baird Like The Risk/Reward In Global Payments Shares

Baird analysts David J. Koning and Eric Ciura liked the risk/reward profile of Global Payments Inc (NYSE: GPN). The analysts continue to see the stock as favorable on the solid underlying industry trends, incremental cash use and synergy gains from Heartland. They have also maintained their Outperform rating and target price of $85 on the company's shares.

The company reported its fourth-quarter results in July end and since then FX is ~0.25 percent less headwind on a year-over-year basis in respect of revenue and EPS in the first two quarters of the fiscal year 2017.

In a research note, the analyst said, "We believe fx is now a ~$0.03 yoy EPS headwind to Q1-17 slightly better than when GPN last reported (~$0.04 headwind). This is ~2.7 percent headwind to FQ1-17 net revenue compared to ~2.9 percent headwind when they last reported."

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The brokerage listed five factors to back its thesis on favorable risk/reward. The first is the incredible execution in the last few years resulting in steady beat. The second is that the stock has the potential to move toward $100 in the next 18-month period based on the estimated cash EPS of $4.50–$5.00 a share in fiscal year 2018. The third related to continuous tailwinds faced by the industry.

The fourth is that a number of possible gains could add 15–20 percent EPS growth for multiple years. The fifth factor is pricing maximization on a long-term basis, incremental share buyback, and possible truck-in acquisitions.

At time of writing, the stock was down 0.91 percent on the day at $76.12.

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