Shift4 Payments' End-To-End Strategy Could Continue To Fuel Faster Than Industry Growth, Analyst Says

Piper Sandler analyst Clarke Jeffries assumed Shift4 Payments Inc FOUR with an Overweight rating and a price target of $69.
Shift4 built its heritage gateway business by embedding payment acceptance technology into existing merchant software, making the continuity of said software the moat and distribution superpower for the payment business.
As a result, FOUR serves 200,000+ customers of all sizes across various industries: food & beverage, retail, gaming, and sports & entertainment, with over $200 billion+ of payment volume processed annually.
After more than a decade of building a gateway business, Shift4 has shifted its focus to making an end-to-end payments offering, combining gateway technology with software solutions.
Jeffries expects this conversion of low-yield gateway payment volumes to high-yield end-to-end volumes will remain a powerful catalyst for FOUR's economics.
Software is the company's superpower, with 500+ technology integrations like DoorDash, Inc DASH, Uber Technologies, Inc UBER Uber Eats, and Sling.
Shift4 Payments originate over 99% of payment transactions directly from the software.
FOUR has seen structural tailwinds coming out of the pandemic as payments volume growth, gross revenue growth, and adjusted EBITDA growth has set the company up to outpace its pre-IPO targets significantly.
Jeffries found FOUR uniquely positioned to gain market share in large, highly-fragmented verticals due to the company's experience solving complex payments and software problems with existing merchant systems.
Acknowledging that persistently high inflation could cause headwinds to discretionary spending, the analyst believes FOUR's potential to shift low-yield gateway customers to end-to-end agreements could drive continued faster-than-market growth.
Price Action: FOUR shares traded higher by 4.89% at $56.06 on the last check Thursday.