Shift4 Payments is poised to have a very good year, according to Goldman Sachs. Analyst Will Nance upgraded Shift4 Payments to buy from neutral, calling it a top 2023 payments pick with more than 20% upside. The analyst said investors are underestimating a company playing offense with strong valuation support. “We believe consensus estimates are not baking in the significant gross margin / EBITDA benefits the company realized in 3Q from in-sourcing its third party distribution, and expect the company to exit the year with a ~43% EBITDA margin versus consensus in 2023 in the high 30s%,” Nance wrote in a Monday note. “While we acknowledge the macro risks and expect mgmt to take a balanced approach to guidance, we see this, combined with improving FCF conversion as providing significant amounts of cushion for FOUR in 2023,” Nance added. Shift4’s public debut on the New York Stock Exchange took place in June 2020, when shares were listed at an offering price of $23. Since then, shares have declined in the last two calendar years, falling about 3% in 2022, and 23% in 2021. As of Friday’s close, they were trading above $56. Now, however, the stock could see more than 20% upside to the analyst’s target price of $67. The price target was raised from $48. Shares rose more than 3% on Monday. More specifically, the analyst said Shift4 is poised to deliver strong growth rates in 2023, and cited three factors, including “1) its gateway conversion strategy 2) geographic expansion into new markets and 3) entry into various new verticals, including stadiums, hospitality charitable giving, and travel.” In other words, Shift4 is able to pass on higher prices to customers either by shifting them to a higher-priced platform or offering the same product at better cost to the payments company. According to the note, about 25% of growth in 2023 will be from gateway conversions. In addition, Shift4 has partnerships with air carrier Allegiant, pay-at-the-table firm Skytab and other companies that will drive near-term growth. “With multiple levers for growth, we don’t believe FOUR needs to be successful in every one and believe execution across several of these initiatives should continue to support growth and help to offset potential macro weakness in its legacy verticals,” Nance wrote. — CNBC’s Michael Bloom contributed to this report.