Shift4 Payments: Analysts Highlight Growth Opportunities Despite Q4 Challenges

RBC Capital analyst Daniel Perlin maintained Shift4 Payments Inc FOUR with an Outperform and raised the price target from $80 to $94.

Although underlying growth drivers remain solid, the analyst stated that a large enterprise client delay and unique gateway to end-to-end conversion caused the company to miss its fourth-quarter gross revenues less network fees guidance. 

As is the case with FOUR, the optics associated with these transactions are worse than the underlying fundamentals. Thus, investors should not lose sight of the material opportunities for growth ahead of FOUR, he said.

Perlin projects first-quarter revenue of $279.6 million (prior $292.2 million) and EPS of $0.65 (prior $0.75).

Mizuho analyst Dan Dolev reiterated a Buy and raised the price target from $82 to $85.

Surprisingly, despite missing the fourth-quarter guide on gross revenue by a fair amount, spreads compressing quarter-on-quarter, and guidance oscillating around consensus, the stock made a nice reversal from down just after reporting to end the day up ~6%. 

The analyst noted that a promise of a second-half-weighted guide, +25% organic growth, and continued focus on the restaurant vertical all helped reignite optimism. Moreover, management is still conducting its strategic review, which helps create a floor for the stock.

Dolev projects first-quarter revenue of $278 million (prior $257 million).

Piper Sandler analyst Clarke Jeffries maintained an Overweight and a $93 price target.

Delays in select enterprise go-lives & gateway migrations weighed on fourth-quarter organic growth, which, by his estimate, moderated rather than accelerated this quarter. However, fiscal 2024 guidance reveals Shift4 remains well on track to achieve strong fundamental results this year. 

Progress on profitability was particularly encouraging, as despite deal delays, the company achieved 51% EBITDA margins in the fourth quarter, net of a 250bps drag from acquisitions: Finaro and Appetize, he noted. 

With larger and larger enterprises partnering with Shift4, there is bound to be volatility based on the timing of deals, but organic growth & profitability continue to trend very favorably. 

FOUR remains one of the most compelling mid-cap names under the analyst’s coverage.

Jeffries projects first-quarter revenue of $290.4 million and EPS of $0.76.

Price Action: FOUR shares closed higher by 11.80% at $85.90 on Wednesday.

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