FleetCor seen benefiting from 2022 deals and freight turnaround

By Liz Moyer

Investing.com -- FleetCor Technologies Inc (NYSE:FLT), a maker of digital payments solutions software for businesses, will benefit from its customer acquisition activity in 2022 and an expected rebound in freight later this year, according to analysts at BofA Securities.

The analysts upgraded the stock to buy from neutral in a note on Tuesday, raising their price target to $240 from $208. Shares of FleetCor rose 2.5% in midday trading. They are up nearly 12% so far this year. The new price target implies 16.5% upside from current levels.

Foreign currency conversion has become less of a headwind given interest rate expectations, the analysts said in their note. They point to BofA’s Trucking Demand Indicator, which is pointing to a bottoming out of freight industry dynamics and “a potential inflection in 2H23.”

FleetCor recently closed its purchase of U.K.-based Global Reach, which will beef up its cross-border payments abilities. 

The analysts said the company’s 2023 guidance “is likely to meet investor expectations” and add they believe the stock offers attractive risk/reward.

The analysts also said they viewed the prospects of a soft landing for the U.S. economy as increasingly feasible, which should boost macroeconomic trends.

In addition, FleetCor appears to be making progress resolving a Federal Trade Commission case involving its fuel card business, which it appealed last year. The company has said the resolution should not have a material impact on its operations moving forward, the analysts noted. 

The company is expected to report earnings on Feb. 8. The consensus estimate of analysts is for revenue of $873 million and EPS of $3.93.