Global Payments Inc (GPN) is considering selling its prepaid debit card unit Netspend of over $2 billion, according to a report from Reuters which cites three people familiar with the matter.
According to the sources, GPN, which is worth $53 billion, is working with an investment bank on the potential sale and began marketing Netspend to buyers last month.
Selling Netspend would provide Global Payments with extra cash to invest in core parts of its business and key future growth drivers, Reuters says one of the sources added.
Shares in GPN are down 2% year-to-date, but the still stock scores a bullish Strong Buy consensus from the Street. That’s with 15 recent buy ratings vs just 2 hold ratings. Meanwhile the average analyst price target of $207 indicates 16% upside potential lies ahead.
“We are attracted to GPN’s business model, characterized by high recurring revenue, long-term contracts, and predictable earnings/ free cash flow” cheered Oppenheimer analyst Dominick Gabriele on September 16.
He reiterated his buy rating on the company with a price target of $198, arguing that underlying historical growth trends strongly support GPN returning/ maintaining merchant revenue growth to low double digits, if not higher.
Plus e-commerce and integrated payments growing 15% slightly faster than US e-Commerce stats is likely to continue, the analyst added. (See GPN stock analysis on TipRanks)