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Why Shares of Shift4 Payments Are Surging Today

By Bram Berkowitz - Mar 11, 2021 at 3:26PM

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An analyst at Bank of America double-upgraded the stock and significantly raised his price target.

What happened

Shares of the digital payments company Shift4 Payments (FOUR -2.58%) entered the final hour of trading up more than 16% after an analyst at Bank of America double-upgraded the stock. The company's stock price has more than doubled over the last six months.

So what

Serving more than 200,000 businesses, Shift4 is a reopening play because many of its clients are in some of the sectors hit hardest by the pandemic such as restaurants and hotels.

The company provides small businesses with point-of-sale services through contactless devices and QR code scanners, as well as online ordering systems for restaurants, payment security, and analytics.

Line with arrow on chart moving upward.

Image source: Getty Images.

Bank of America analyst Mike Colonnese double-upgraded Shift4 from underperform to buy and lifted his price target from $72 to $94. The stock currently trades at more than $96 per share.

"We believe FOUR is well positioned to see a sharp acceleration in end to end payment volume growth (FOUR's most important metric) beginning this month, the magnitude to which we do not believe is fully priced into the stock," Colonnese wrote in a research note.

Now what

Management is forecasting a strong rebound in 2021. Shift4 is expecting to generate end-to-end payment volume between $36 billion and $38 billion in 2021, which will drive gross revenue minus network fees of $450 million to $460 million.

That's considerably more than in 2020 when the company drove end-to-end payment volume of roughly $24.3 billion and gross revenue minus network fees of $323 million.

Additionally, the company has made several acquisitions lately including one that will help it with international growth and one that will help get business from sports stadiums and other entertainment venues, so the company has a good deal of momentum right now.

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Stocks Mentioned

Shift4 Payments, Inc. Stock Quote
Shift4 Payments, Inc.
$44.49 (-2.58%) $-1.18

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