Global Payments shares rose nearly 5% on Thursday, a day after the major fintech company reported second-quarter earnings that beat Wall Street expectations. Global Payments said on Aug. 7 that adjusted earnings per share for the three months ended June 30 rose 12% to $2.93, compared with $2.62 for the same period in 2023. The $2.93 was 2 cents more than the $2.91 expected by analysts. Second-quarter adjusted net revenue rose 6% to $2.32 billion.
Adjusted net revenue for merchant solutions, Global Payments’ largest segment, increased nearly 8% to $1.81 billion.
“It is encouraging that while Merchant’s operating margin improved slightly year-over-year by about 30 basis points, it is about 20 basis points above the Wall Street average and much better than feared given management’s previous comments that margin would likely be flat in the second quarter,” Raymond James analyst John Davis said in an Aug. 7 note.
Global Payments provides technology and services used by companies in industries such as hospitality, retail, healthcare and education. The company’s shares have recovered from a 52-week low of $91.60 in June. The stock rose 4.6 percent on Thursday to close at $104.60, but gave back some of those gains on Friday to close at $103.48 in the afternoon.
Global Payments CEO Cameron Bready said Wednesday that the company had acquired takepayments, which provides payments for U.K. merchants, as well as an unnamed early-stage technology company it had partnered with in Europe, according to a transcript of the Aug. 7 second-quarter earnings call. The transactions are valued at $370 million combined, Raymond James’ Davis said. Takepayments “is expected to contribute around 100 basis points to second-half trade growth, but the tailwind will be offset by a worsening FX headwind,” he wrote in the note. (Reuters reported in February that Global Payments was close to buying takepayments for more than $250 million.)
Some bankers wondered whether Global Payments would soon announce more acquisitions, perhaps at its investor conference in New York City on Sept. 24. The company was seeking a buyer for AdvancedMD, a provider of medical billing software, including payments to physician practices. Assets reported in March.
Global Payment CFO Josh Whipple reiterated the company’s outlook for 2024. He expects adjusted net revenue in a range of $9.17 billion to $9.30 billion and adjusted earnings per share in a range of $11.54 billion to $11.70, according to a statement. Annual adjusted operating margin for 2024 is expected to increase by as much as 50 basis points, Whipple said.
Raymond James’ Davis reiterated his Outperform rating and $144 price target on Global Payments. “Overall, we are encouraged by the improving trading margins that were a key reason for investors following the first quarter numbers, and with the stock trading at just 8x our 2025 adjusted earnings per share estimates (~50% discount to S&P 500 Equal Weight) despite normalized EPS growth in the low double digits, we remain positive on the risk/reward,” he wrote.
