Bank of America on Tuesday turned bullish on payments company FleetCor Technologies (NYSE:FLT) as it offers attractive risk/reward given progress in addressing headwinds and its “compelling” valuation (trading below trough COVID levels).
“We expect the company to announce additional progress in addressing idiosyncratic headwinds such as the FTC case and divesture of the Russia business,” said analyst Mihir Bhatia, upgrading the stock to Buy from Neutral.
Bhatia noted that forex is now less of a headwind given interest rate expectations and intra-quarter currency movements. BofA expects FleetCor (FLT) will enjoy the full-year benefit of strong customer acquisition in 2022, which should help offset Y/Y fuel price headwinds.
It expects a mostly in-line Q4 earnings report for FleetCor (FLT). “Our 4Q22 revs/EPS estimate of $874M/$3.91 is slightly below consensus at $875M/$3.93 driven mostly by higher processing expenses, partially offset by a lower share count,” said Bhatia.
BofA also raised its price target to $240 from $208, to account for higher market multiples and progress in addressing idiosyncratic overhangs. PT implies 19.4% potential upside to its last close.
FleetCor (FLT) will report Q4 results on February 8. Shares +1.2% in early trade.