Shift4 Payments Earns 'Buy' Rating From Analyst Amid Growth Prospects

Mizuho Securities analyst Dan Dolev initiated coverage on Shift4 Payments Inc FOUR at a Buy rating with a price target of $80.

The analyst sees a gateway-only volumes runway of $150 billion that can be converted into end-to-end (E2E) volumes at a little additional cost.

The analyst thinks this can facilitate 4x better economics, with an incremental gross profit contribution of around 25bps-30bps.

However, Dolev assumes that only 40% of the runway will be realized by 2025, driving an estimated incremental gross profit of $150 million-$200 million.

This represents 25% of its estimated 2022-2025 total incremental gross profit of $650 million-$700 million, 10% above consensus by 2025. 

The analyst is pleased with FOUR's lower cost-to-customer vs. its peers and efficient capital deployment strategy.

Dolev expects revenue of $952 million in 2023 and $1.21 billion in 2024. 

Price Action: FOUR shares are trading higher by 2.55% at $68.39 on the last check Tuesday. 

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