Atlanta-based Global Payments (GPN) has announced that it is reducing expectations for 1Q20 based on a material slowdown in activity to end the quarter. Furthermore, the company suspended its full year 2020 guidance given uncertainties around the duration and severity of COVID-19.
“Adjusting for the updated guidance, our 1Q EPS moves to $1.54 (from $1.67). Our 2020 EPS moves to $6.30 (from $6.85). Our one-year price target moves to $158 (from $168), applying a 25x multiple” commented Rosenblatt Securities’ Kenneth Hill on the news.
To counter some of the headwinds, GPN has, and will continue to, reduce expenses where appropriate. The company expects to provide a more thorough update on its 1Q20 earnings call.
“Starting in mid-March COVID-19 began to impact the company’s results significantly in North America and Europe as governments took actions to encourage social distancing and implement shelter in place directives” GPN told investors.
“The deterioration accelerated toward the end of March as the pandemic spread further and the number of countries and localities adopting restrictive measures meaningfully increased.”
As a result, the company now expects the year-over-year GAAP revenue and GAAP earnings per share trends for the first quarter to be roughly consistent with the fourth quarter of 2019.
Nonetheless, GPN maintains an overall bullish outlook from the Street, with a Strong Buy analyst consensus. (See Global Payment’s stock analysis on TipRanks).
With shares down 20% year-to-date, the $202 average analyst price target indicates upside potential of just over 40%. “We still see a path ahead that is as strong as ever as we move away from this pandemic” explains Hill.
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