What happened
For the week, shares of the integrated payments company Shift4 Payments (FOUR -3.67%) had jumped more than 19% as of 1:55 p.m. ET Thursday, according to data provided by S&P Global Market Intelligence, after the company reported earnings results. Several Wall Street analysts also raised their price targets on the stock.
So what
For the fourth quarter, Shift4 delivered $0.46 of diluted earnings per share on total revenue of nearly $538 million. While earnings missed consensus estimates, revenue beat slightly.
"Throughout the last year, I emphasized Shift4's track record of performance during both the best and most challenging of economic times," CEO Jared Isaacman wrote in a letter to shareholders. "We have been EBITDA positive for nearly 20 years and self-financed through the first 15 years of our corporate existence."
For this year, the company is expecting to grow end-to-end payment volume to $109 billion at the high end of its guidance. Shift4 expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to potentially come in as high as $435 million and $200 million of adjusted free cash flow. All of these numbers are much higher than what the business generated in 2022.
Several Wall Street banks raised their price targets on the stock this week. In a note, Piper Sandler raised its price target to $85 per share, which implies good upside from the stock's current price of just below $69 per share. Piper Sandler analysts also said they think Shift4 could potentially double sales over the next three years while boosting its margin.
Now what
Shift4's payments technology has carved out a nice niche among restaurants, hotels, complex retail, and sports and entertainment venues, and the company clearly has some nice momentum right now. While Shift4 can navigate a difficult environment, avoiding a more severe recession would be great for the company. Either way, the stock is well positioned to be a good long-term play.
