Stifel analyst John Davis thinks Vantiv Inc.'s planned acquisition of Worldpay Group plc would be a "strategic home run" that would lead to multiple growth and modest accretion. He upgraded the company's shares to "buy" from "hold" and added the company to the Stifel Select List.
No two businesses fit together better in the payments industry, Davis wrote in an Aug. 10 note to clients. The deal offers Vantiv international presence and an industry-leading e-commerce acquisition platform, while Vantiv's U.S. expertise would give Worldpay a boost, Davis said. In addition, Worldpay's small-business focus would diversify Vantiv's market exposure and insulate it from competition with Amazon.com Inc., he said.
"Combined, the company will become the undisputed leader in global acquiring and potentially significant revenue synergies coupled with scale benefits should create meaningful shareholder value over time," Davis said.
He increased the company's target price to $85 from $63. He set his third-quarter EPS estimate at 89 cents and moved up his full-year EPS estimates to $3.37 from $3.27 for 2017 and to $3.76 from $3.65 for 2018.