On Friday, Jefferies adjusted its outlook on Corpay (NYSE:CPAY), increasing the price target to $355 from the previous $340 while maintaining a Buy rating on the company's shares.
The firm's analysts provided insights into their expectations for the company's upcoming quarterly performance, indicating a likely guidance below the consensus estimates for the Street. Despite this, they anticipate a reaffirmation of the full-year revenue forecasts, suggesting a significant ramp-up in the second half of the year.
The Jefferies analysts have set their second-quarter revenue estimate for Corpay slightly below the Street's expectations, incorporating an estimated 8% organic growth, which reflects a three percentage point acceleration.
The primary concern for the upcoming quarter centers around the Vehicle segment, particularly in Fleet, where Jefferies models a 2.5% organic growth. This figure is an acceleration from the first quarter but falls short of the Street's estimates, which imply a more optimistic 5% year-over-year growth.
Despite a potential underperformance in the second quarter, Jefferies expects Corpay to reaffirm its full-year revenue targets. This would indicate a more pronounced increase in revenue during the second half of the year compared to what was previously anticipated.
The firm's analysis suggests that even with the current upward trend in fuel costs, the impact of prices and spreads on Corpay's business is projected to be a slight net year-over-year headwind.
In summary, Jefferies has conveyed a positive outlook on Corpay by raising its price target and maintaining a Buy rating. The firm anticipates a temporary dip in second-quarter revenue guidance but remains confident in the company's ability to achieve a strong rebound in the latter half of the year, as indicated by the reaffirmation of its full-year revenue projections.
InvestingPro Insights
Corpay's financial health and market performance continue to be areas of keen interest for investors. According to real-time data from InvestingPro, Corpay has a substantial market capitalization of $21.97 billion, showcasing its significant presence in the market. The company's P/E ratio stands at a high 22.73, which might raise concerns about the stock being overvalued relative to its near-term earnings growth. However, this is somewhat mitigated by the company's strong fundamentals, including a robust gross profit margin of 78.18% over the last twelve months as of Q1 2023. This indicates Corpay's efficiency in managing its cost of goods sold and maintaining profitability.
InvestingPro Tips highlight that despite not offering a dividend, analysts predict Corpay will be profitable this year, which is supported by the fact that the company has been profitable over the last twelve months. Additionally, the company trades at a high Price / Book multiple of 6.69, suggesting that investors have high expectations for future growth and profitability. For those considering an investment in Corpay, these insights may prove invaluable. There are additional InvestingPro Tips available, which can be accessed through the InvestingPro platform, providing a comprehensive analysis of Corpay's financial metrics and market performance. Interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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