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Morgan Stanley analysts told investors in a note they have decided to upgrade the stock due to its fair valuation and “recalibrated growth prospects.”
“At these levels, we think the risk/reward for FOUR’s stock is more fairly balanced as we believe current valuation still reflects strong expected volume trends and opportunity for upside from new enterprise wins, momentum with the SkyTab rollout, and additional M&A, but better accounts for ongoing take rate compression that can result in slowing revenue growth,” they wrote.
“Compared to peers, FOUR trades at a 2.2x premium to FI, a 6x premium to GPN, and a 6x discount to SQ. Compared to the broader market, FOUR now trades at a ~1x discount, vs. a historical ~6.5x premium over the last year.”
The analysts also noted that investor expectations have “level-set with volume/take-rate trade-off now better appreciated.”
