Barclays Initiates Overweight Rating on Shift4 Payments Stock with $120 Price Target
Barclays recently initiated coverage on Shift4 Payments (NYSE: FOUR) stock with an Overweight rating and a price target of $120. The firm believes that Shift4 Payments is undervalued based on conservative estimates by other analysts and its low earnings multiples compared to peers.
The conservative outlook on Shift4 Payments may be due to the lack of company-issued financial guidance beyond the fourth quarter of 2024. However, Barclays anticipates that an update from management in the third quarter of 2024 could serve as a catalyst for higher estimates.
Barclays also highlights that market expectations for fiscal years 2025 and 2026 may not fully reflect Shift4 Payments' international growth efforts, including its expansion via Starlink and entry into the European market. The firm compared Shift4 Payments' EV/EBITDA multiple for fiscal year 2026 to that of incumbent and newer high-growth acquirers.
Barclays forecasts a 30% revenue growth rate for Shift4 Payments through fiscal year 2027, with adjusted EBITDA margins expanding to over 50% by fiscal year 2025. The firm believes that Shift4 Payments' stock should trade at an EV/EBITDA multiple of around 12x.
Recent developments such as robust second-quarter results, acquisitions of Revel and Vectron, and partnerships with sports teams have garnered positive responses from analysts. Shift4 Payments' market capitalization, revenue growth, and EBITDA growth reflect high growth expectations.
Investors interested in Shift4 Payments should consider the company's strong performance and market confidence, as indicated by its return over the past year and trading near its 52-week high. For a more in-depth analysis, InvestingPro offers 12 additional tips to inform investment decisions.
In conclusion, Shift4 Payments is positioned for growth and offers potential value for investors. By understanding the company's financial outlook and recent developments, investors can make informed decisions to maximize their returns.