TDC Sets $91 Price Objective for GPN: Reasons to Maintain Hold After Earnings Surge

TD Cowen's Price Target Update: What Drove the Change?

TD Cowen revised its price target for Global Payments following the company’s fourth-quarter earnings release and forward-looking guidance. The company posted adjusted earnings per share of $3.18, surpassing analyst expectations and marking a 12% increase from the previous year. More significantly, management outlined a robust outlook for 2026, projecting adjusted EPS between $13.80 and $14.00. This guidance points to high single-digit to low double-digit growth from 2025, providing investors with a clear benchmark for future performance.

The market responded swiftly and decisively. After the February 18 announcement, GPN shares jumped roughly 16%, reaching around $81. This surge reversed a period of lackluster performance, as the stock had been trading near the lower end of its 52-week range. The rally indicates that investors are rewarding the company for both its improved operating margins—up about 80–100 basis points—and its enhanced medium-term visibility following recent strategic changes.

However, while the quarterly beat and optimistic 2026 guidance were clear positives, the stock’s rapid 16% climb suggests much of the good news is already reflected in the current price. Going forward, the company’s ability to consistently deliver on these higher expectations will be crucial for further upside.

Why Maintain a Hold? Assessing Valuation and Execution Risks

TD Cowen’s stance is cautious. The firm raised its price target to $91 but kept a Hold rating, signaling that the stock is fairly valued at present levels. With shares trading near $78.34, the new target implies about 16% potential upside—roughly matching the recent post-earnings rally. In other words, the positive developments have largely been priced in.

This conservative approach is echoed by the broader analyst community. While TD Cowen’s target is more restrained, the average analyst price target sits at $98.96, highlighting Cowen’s more measured outlook based on its risk assessment.

RSI(14) Oversold Long-Only Strategy Backtest for GPN

• Entry: Buy GPN when RSI(14) falls below 30
• Exit: Sell when RSI(14) exceeds 70, after 20 trading days, upon a 10% gain, or a 5% loss
• Backtest Period: 2024-02-25 to 2026-02-24

Backtest Results

• Total Return: -27.87%
• Annualized Return: -13.21%
• Maximum Drawdown: 37.19%
• Profit-Loss Ratio: 1.2
• Total Trades: 18
• Winning Trades: 6
• Losing Trades: 12
• Win Rate: 33.33%
• Average Hold Days: 10.83
• Max Consecutive Losses: 4
• Average Win Return: 9.77%
• Average Loss Return: 7.03%
• Max Single Win: 13.58%
• Max Single Loss: 16.55%

Valuation risk is now front and center. The post-earnings rally has pushed the stock’s valuation higher, leaving less margin for error. While operating margins improved by 80–100 basis points last quarter, the market has already rewarded this progress. Future earnings reports must meet or exceed the ambitious new targets, or the stock could quickly give back recent gains.

In summary, TD Cowen’s Hold rating reflects a tactical approach: the firm recognizes the positive catalysts but believes the stock’s rally has outpaced its fundamentals. The focus now shifts from reacting to news to monitoring execution that justifies the higher valuation.

Capital Allocation and Strategic Transformation

Global Payments’ capital allocation plan is a clear indicator of its strategic direction. Management has authorized a $2.5 billion share repurchase, with $550 million to be repurchased immediately through an accelerated program. This aggressive buyback, part of a broader goal to return over $7.5 billion to shareholders by 2027, underscores management’s confidence in the company’s intrinsic value.

This capital return is supported by a significant business transformation. The company has finalized its acquisition of Worldpay and exited the Issuer Solutions segment, repositioning itself as a focused merchant solutions provider. By moving away from services for banks and concentrating on merchant technology and software, Global Payments aims to streamline operations and target higher-growth areas within the payments industry.

The objective is to build a more agile and efficient organization. The CEO has pointed to the launch of the Genius platform and strong commercial momentum from go-to-market investments as evidence of this new strategy’s early success. The 2026 guidance, projecting adjusted EPS growth of 13% to 15%, is based on the expectation that this focused approach will drive sustainable growth.

Nonetheless, there are execution risks. Integrating Worldpay is a complex process, and the company must demonstrate it can maintain momentum in Merchant Solutions without the revenue from the divested Issuer segment. The success of the capital allocation plan, which depends on robust cash flow from the streamlined business, is now closely tied to operational execution. While the market has responded positively to the strategic clarity, the next phase will require delivering on these operational and financial promises.

Looking Ahead: Key Catalysts and Risks

Reaching the $91 price target will depend on several near-term milestones. The most important is delivering on the 2026 outlook. The company has committed to expanding adjusted operating margins by about 150 basis points this year—a critical indicator of whether integration and focus are translating into improved profitability. Any deviation from this margin improvement could impact the expected EPS growth.

The first major checkpoint will be the first-quarter earnings report, anticipated in May. Investors will be watching closely to see if revenue and margin trends are on track to meet the full-year EPS guidance of $13.80 to $14.00. Consistent outperformance would support the new price target, while a miss could prompt a downward revision.

Additionally, the pace of capital returns will be under scrutiny. The company has pledged to return over $2 billion to shareholders in 2026, including the $550 million accelerated buyback. The execution of this plan will directly affect per-share metrics. Any delays or reductions in the buyback would be a negative signal, while faster execution could further boost EPS.

Finally, external factors such as competition and macroeconomic trends bear watching. As a pure-play merchant solutions provider, Global Payments is sensitive to the health of small and mid-sized businesses. Increased competition in payments software or a broader economic slowdown could challenge the company’s goal of achieving approximately 5% constant currency adjusted net revenue growth.

In conclusion, the stock’s current momentum is driven by recent events. The post-earnings rally has already priced in much of the strategic clarity and 2026 guidance. The next phase will be determined by the company’s ability to consistently deliver on its promises in upcoming quarters.