BMO Capital Maintains Buy Rating on Corpay (CPAY), Keeps PT

On June 3, BMO Capital’s analyst Rufus Hone reiterated a Buy rating on Corpay Inc. (NYSE:CPAY), with an unchanged price target of $410. In his view, CPAY’s planned acquisition of Alpha Group International presents a strategic opportunity, particularly in strengthening its position in cross-border payments.

The analyst believes that the deal could accelerate Corpay’s efforts to strengthen its footprint in the financial institutions space, which remains the company’s top priority area. While still early, the transaction appears likely to be well-received by investors. Hone anticipates the acquisition could contribute to higher earnings over time and help drive stronger organic revenue growth.

A customer enjoying the convenience of a mobile financial services transaction.

The company had made an all-cash takeover offer for the London-listed Alpha Group International at the beginning of May, but the latter’s board had rejected the offer. The bid deadline has been extended till July 7, and the companies are still sitting across the negotiating table.

From a business mix perspective, Hone believes that the acquisition would substantially increase Corpay’s exposure to corporate payments. This added scale is expected to improve the company’s capabilities and competitive positioning,  especially within financial services.

Although the analyst expects any near-term earnings boost to be limited, he projects that the longer-term accretion potential will be positive. Coupled with Corpay’s existing momentum in B2B payments, these factors support the continuation of his constructive stance on the stock.

Corpay Inc. provides payment and spend management solutions that enable businesses and consumers to control expense-related purchasing and payment processes.

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