Navigating Investment Opportunities with Smart Score: Analyzing Shift4 Payments and Its Potential

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In a market marked by volatility and recent declines, it’s crucial for investors to uncover hidden gems that could hold substantial value. Enter the Smart Score, an AI-driven tool that evaluates stocks based on historical performance indicators. This tool can be particularly useful when combined with a pullback in stock prices, potentially indicating investment opportunities that might have been overlooked.

Two standout stocks with a ‘Perfect 10’ Smart Score are worth considering: Shift4 Payments and another to be explored. These companies have caught the attention of analysts, but let’s delve into their potential and assess if they align with your investment strategy.

Shift4 Payments (FOUR): Seizing Opportunities in Tech and Payments

Shift4 Payments, headquartered in Allentown, Pennsylvania, specializes in payment processing solutions across various industries. Notably, their clientele includes major names like Best Western Hotels, Applebee’s, the Utah Jazz, and Gold’s Gym. With a customer base of over 200,000 and partnerships with over 7,000 sales partners, Shift4 handles a staggering 3.5 billion transactions, amounting to over $200 billion annually.

An important development is Shift4’s impending acquisition of Finaro. This strategic move, valued at $525 million, grants Shift4 access to Finaro’s European processing network. Initially expected to conclude in March, regulatory requirements have postponed the deal, which is now projected to be finalized in Q3/early Q4.

During the latest earnings release, Shift4 demonstrated notable growth, surpassing expectations. Their Q2 2023 revenues reached $637 million, a 26% YoY increase and nearly $4 million above estimates. The non-GAAP adjusted EPS of 74 cents per share exceeded projections by 22 cents and was more than triple the previous year’s result. The company also achieved a remarkable 59% YoY rise in end-to-end payment volume and a 61% YoY increase in gross profit.

Despite this impressive performance, the stock recently experienced a decline of 19% during August. According to Raymond James analyst John Davis, this dip presents an attractive opportunity for investors. Davis believes that the stock’s valuation and growth potential make it a compelling entry point, leading him to upgrade his rating from Neutral to Outperform (Buy). His price target of $74 suggests a potential 33% upside from the current level.

Shift4 Payments has garnered a Strong Buy consensus rating from 17 recent analyst reviews, with 16 Buy ratings and 1 Hold rating. The stock is currently trading at $55.76, and the average price target of $83.75 implies a promising 50% growth potential over the next year.

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