UPDATE: SMBC Nikko Securities Starts Shift4 Payments (FOUR) at Neutral
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SMBC Nikko Securities analyst Andrew Bauch initiates coverage on Shift4 Payments (NYSE: FOUR) with a Neutral rating and a price target of $60.00.
The analyst comments "
Since its 2020 IPO, Shift 4 has been one of the more debated names in the integrated point-of-sale space (“IPOS”). From the bull's perspective, investors see a compelling higher-than-typical GARP stock (+30% gross profit CAGR) and despite exposure to COVID-impacted verticals, admirable volume trends over the last several years. Detractors often question the Company’s ability to sustain said growth, particularly in the long-term given heightened competitive dynamics among IPOS companies, many of which have highly differentiated capabilities in FOUR’s core restaurant and hospitality verticals (FOUR services 1/3 of the restaurants and hotels in the U.S. and >250k merchants in total). In our view, Shift 4 has made impressive strides that investors should take notice of, notably (1) executing on its gateway conversion strategy (converting merchants from low yielding gateway processing to higher yielding full-stack), (2) supplementing growth with organic wins, ex-gateway, and (3) positioning the business for incremental growth opportunities in emerging verticals (charities, gaming and airlines, among others). While we appreciate management’s aspirations for a 50% end-to-end volume CAGR and 30% net revenue CAGR through 2024, we believe this algorithm is largely priced in. We can envision a gross profit CAGR near 40% in our bull scenario, however, we see limited room for outperformance beyond that. While it is possible that shares may outperform the S&P in a hypothetical cyclical upturn, we see greater alpha opportunities across other names in our coverage at this time and initiate Neutral on the shares."
Shares of Shift4 Payments closed at $46.61 yesterday.
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