GoDaddy Buys Poynt For $365M; Street Is Bullish

GoDaddy announced the acquisition of payments processor, Poynt, for $365 million. The transaction is expected to close in the first quarter of 2021.

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Per the deal, GoDaddy (GDDY), an internet domain and web hosting company, “will pay $320 million in cash” and “$45 million in deferred cash payments subject to certain performance and employment conditions over three years.”

Poynt offers a wide range of payment processing products for small businesses and is used by more than 100,000 merchants. The combination of Poynt with GoDaddy’s Websites + Marketing (W+M) and WordPress commerce services will thus help small businesses to grow their sales and boost customer satisfaction, the company said.

GoDaddy’s CEO Aman Bhutani commented, “Commerce is critical to our customers and we continue to invest in building seamlessly intuitive experiences that enable small businesses to sell everywhere.” He added, “Poynt accelerates our strategy to provide a complete suite of commerce and payment services to address this critical customer need and focus on a large addressable market opportunity.” (See GDDY stock analysis on TipRanks)

Last month, GoDaddy reported better-than-expected 3Q results. Sales rose 11% to $844.4 million and exceeded analysts’ expectations of $835.2 million. The company’s EPS declined 10% year-over-year to $0.38 but came ahead of the Street’s estimates of $0.34.

Following the upbeat 3Q results, Rosenblatt Securities analyst Mark Zgutowicz raised the stock’s price target to $100 (16.5% upside potential) from $96 and maintained a Buy rating on Nov. 5. The analyst said, “GoDaddy delivered another clean quarter across the board including a repeat record 400k net sub additions. While the sub momentum likely takes a breath in the next quarter or two, we expect W+M pricing to begin to balance unit dynamics.”

The rest of the Street has a form bullish outlook on the stock with a Strong Buy analyst consensus. The average price target stands at $97 and implies upside potential of about 13% to current levels. Shares have gained 26.4% year-to-date.