DLX: Expanded Bank Partnership Will Drive Attractive Repricing Despite Margin Headwinds

Analysts have modestly raised their target price on Deluxe from approximately 26.75 dollars to about 28.67 dollars, citing a slightly lower perceived risk profile despite reduced expectations for both revenue growth and profit margins, along with a higher assumed future valuation multiple.

What's in the News

• Deluxe reported that between July 1, 2025 and September 30, 2025, it repurchased zero shares under its ongoing buyback program, indicating a pause in near term capital returns via repurchases (Key Developments).
• The company has now completed the repurchase of 4,796,490 shares, representing 10.79 percent of its shares for a total of 212.55 million dollars under the buyback authorized on October 25, 2018, signaling substantial cumulative capital return to shareholders (Key Developments).
• Deluxe announced an expanded partnership with Peoples Bank to deliver integrated Merchant Services, deepening a relationship that already includes promotional and check business, and highlighting the company’s cross selling capabilities under its One Deluxe strategy (Key Developments).
• The Peoples Bank engagement is positioned as a way to transform transactional services into strategic assets, aimed at boosting customer loyalty, operational efficiency, and non interest income for the bank, underscoring Deluxe’s value proposition to financial institution clients (Key Developments).

Valuation Changes

• The fair value estimate has risen slightly from approximately 26.75 dollars to about 28.67 dollars per share.
• The discount rate has declined modestly from around 9.92 percent to roughly 9.62 percent, reflecting a slightly lower perceived risk profile.
• The revenue growth assumption has been reduced slightly, from about 0.89 percent to roughly 0.81 percent.
• The net profit margin expectation has fallen significantly, from around 6.65 percent to about 3.39 percent.
• The future P/E multiple assumption has increased substantially, from roughly 11.35 times to about 23.63 times, implying a higher expected valuation level.