We aggregate recent metrics and management commentary to identify key trends across the IT Services industry. Consistent with the last recession, outsourcing has shown relative resilience vs. consulting while clients maintain “run the business spend” amid tightened budgets. That said, we believe a dichotomy of discretionary vs. nondiscretionary spend is a more effective way to analyze current trends as clients utilize various new offerings to play defense in the current environment.
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Over the last several years, various challenger banks have become increasingly prevalent in both the U.S. and abroad, driven by rising consumer demand for efficient, contactless, and low-cost banking solutions. These platforms present an ideal solution particularly for the underbanked and younger generations who often have limited to no credit history and/or a degree of mistrust for traditional banks post financial crisis.
Initiating Outperform with $44 Price Target: We highlight FOUR’s proven track record of organic trends and accretive M&A, coupled with the Company’s differentiated integrated payments model and vertical expertise, which we believe will support LT 11-13% revenue and 18-20% adj EBITDA growth in a normalized environment.
Recent data continues to show the momentum of digital payments, with e-commerce spending remaining at elevated levels and the adoption of contactless payments increasing. As the COVID-19 pandemic has led to a variety of new norms, the shift towards digital payments has accelerated. While the virus has been the primary cause behind the rise of many new habits, it’s evident that many trends are positioned to continue in a post-COVID-19 world.