Balanced Risk/Reward Setting Up For Global Payments Ahead Of Q1 Earnings

Baird expects Global Payments Inc (NYSE: GPN)'s first quarter EPS "in line/slightly above" consensus when it reports its quarterly results Wednesday.

Analyst David Koning, who has an Outperform rating and $85 target price on the stock, expects first quarter earnings of $0.82 versus $0.83 consensus.

The analyst also projects revenue likely in line/mildly above his $813 million estimate as he believes most estimates "reasonable/slightly conservative."

"We view as good risk/reward, as we doubt much downside risk to FQ1 results, and believe investors will continue to like the potential for multiple years of 15-20% EPS growth," Koning wrote in a note.

The analyst expects the company to maintain most of its F2017 outlook. Koning projects Global Payments to reiterate EPS view of $3.40 - $3.50; "upper half possible based on mildly positive fx movements, faster HPY synergies and accretive uses of cash."

Further, Koning expects the company's $3.2-$3.3 billion revenue guidance to remain intact and the company to maintain its view of "up to 40bps expansion" in adjusted margins.

The analyst said GPN should benefit from global industrial growth of mid/higher-single-digits. Further, the company's growing international presence offers strong growth potential.

"There's a story to $4.50-5.00/share of cash EPS by C2018 and that could carry the stock toward $100 over the next 18 months. We model $4.38, but consider ongoing acquisitions, buybacks, and pricing optimization all to be potential drivers into the $4.50-5.00 range," Koning added.

At time of writing, shares of Global Payments were up 0.60 percent to $77.22.