Vantiv Will Be The Merchant Acquirer To Own Over 2018, Says Buckingham

One analyst thinks payment processing company Vantiv Inc VNTV will be the merchant acquirer to own over the course of 2018.

The Analyst

Buckingham Research Group analyst Chris Brendler upgraded his rating on Vantiv from Neutral to Buy and increased his price target from $77 to $90.

The Thesis

Following the release of third quarter results from Vantiv and WORLDPAY GRP PLC WPYGY, expectations have been lowered, Brendler said in a note. Brendler is waiting for near-term headwinds to be better reflected in the stock.

The recent merger update from Vantiv and Worldpay revealed slower-than-expected revenue growth at Worldpay, details concerning cost synergies, improved visibility on revenue synergies and clarity on pro forma financials, Brendler said.

Brendler maintains his 2019 accretion estimate at 5 percent and sees potential upside from top-line and cost synergies and accelerated debt paydown.

Although Buckingham is still worried about 2018 Worldpay dilution, it thinks the stock has already begun discounting the upside seen for 2019.

"With E-COM revenue synergies boosting the top line outlook to 10+%, we believe VNTV will become the merchant acquirer to own over the course of 2018 and we want to be early," the note said.

The firm clarified that Vantiv's leverage to e-commerce and the potential for 10 percent organic top-line growth justifies a premium valuation for the stock.

Price Action

Vantiv shares are up over 22 percent in the year-to-date period. The price target represents 24 percent upside from current levels.

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