tl;dr
Affirm Holdings (NASDAQ:AFRM), Fidelity National Information Services (NYSE:FIS), Robinhood (NASDAQ:HOOD), and Block (NYSE:SQ) are Mizuho Securities USA's top picks for the fintech payment sector for 2024. Meanwhile, analyst Dan Dolev is more cautious on Coinbase Global (COIN) and Toast (TOST). ...
Affirm Holdings (NASDAQ:AFRM), Fidelity National Information Services (NYSE:FIS), Robinhood (NASDAQ:HOOD), and Block (NYSE:SQ) are Mizuho Securities USA's top picks for the fintech payment sector for 2024. Meanwhile, analyst Dan Dolev is more cautious on Coinbase Global (COIN) and Toast (TOST).
The analyst points to four key trends in 2024:
- Payment networks Visa (V) and Mastercard (MA) have a good track record of performing well during difficult macroeconomic circumstances, but "potential disruption looms from the likes of FedNow and other account-to-account payment schemes, which may nibble at the networks' top-line growth over time," Dolev wrote.
- In the merchant acquiring space, vertical specialization was a main theme for 2021 and 2022, especially for Toast (TOST), which caters to the restaurant industry. However, Dolev believes distribution capabilities will be a key competitive advantage for long-term growth, with Fiserv's (FI) Clover standing out in that capacity. Other merchant aquiring business are Block's (SQ) Square and Shift4 Payments (FOUR).
- In lending technology and consumer finance, delinquencies are continuing to inch higher, but Mizuho expects investors will start to focus on the lower rate environment in H2 2024. LendingClub (LC) said conversations are starting to shift from "backward-looking" credit challenges to "forward-looking" opportunities. That bodes well for stocks like Affirm Holdings (AFRM) and SoFi Technologies (SOFI), Dolev said.
- Cryptocurrency: In the last quarter of 2023, the prices of bitcoin (BTC-USD) and many bitcoin-exposed stocks surged in anticipation that the Securities and Exchange Commission would approve the first spot bitcoin exchange-traded funds. However, activity levels have stayed well below prior cycle peaks, the analyst said. "We expect fundamentals (as they pertain to COIN) to come back into focus in '24, which is likely to reset the bar lower for over-earning pure-play crypto exchanges like COIN, while HOOD is likely to benefit from strong execution and an improved trading environment."
Dolev makes the following observations on his top picks for 2024:
- Affirm Holdings (AFRM): He considers the Affirm Card to be a game-changer to credit payments and is "highly bullish on the opportunity to bring BNPL/hybrid debit/credit to brick and mortar through the card." He's also bullish on the opportunity for Affirm's transactional account.
- Fidelity National Information (FIS): After its Worldpay divestiture, "expect improved stability over time to be a key feature of the FIS investment thesis. 2024 EPS is likely to be better than feared."
- Robinhood (HOOD): "Share gains in retail trading across products should ensue as improved sentiment benefits equity and options trading." Dolev also points to new products and geographic expansion into the U.K. and Asia. New products like advanced trading, retirement accounts, and credit/debit card can fuel positive earnings estimate revisions over time, he reasoned.
- Block (SQ): "Our bottom-up ecosystem models point to SQ comfortablty achieving at least mid-teens GP growth in '24. This coupled with upside to the $2.4B EBITDA guide, presents an attractive opportunity at these valuations."
For payment stocks with market cap over $2B, the SA Stock Screener's top picks are StoneCo (STNE), Block (SQ), PagSeguro Digital (PAGS), and Shift4 (FOUR).
More about Affirm Holdings Inc
Affirm Holdings Inc operates a platform for digital and mobile commerce in the United States and Canada. The company's stock performance has shown a decrease of -3.05, with a 5.77% change in the market sentiment. The company's market capitalization stands at 12,725,632,000. While the stock has shown some volatility with a Relative Strength Index (RSI) of -0.526, it is important to consider potential risks and uncertainties associated with this analysis, as past market behavior is not always indicative of future performance.
More about Fidelity National Information Services Inc
Key Financial Metrics:
- Market Cap: $35,466,093,000
- EPS: 2.03
- P/E Ratio: -27.76
- ROE: 24.74%
- Debt/Equity: -1.657
- Revenue: $14,645,000,000
- Current Stock Price: $67.52
Stock Performance:
- The stock has a relatively low P/E ratio, indicating potential undervaluation.
- ROE is strong at 24.74%, suggesting efficient use of shareholder equity.
- However, the negative EPS and Debt/Equity ratio raise concerns about the company's financial health.
Market Sentiment:
- The company's focus on FinTech and its diverse range of financial solutions indicate potential for growth.
- However, the negative EPS and Debt/Equity ratio may deter some investors and lead to a cautious sentiment.
More about Robinhood Markets Inc
Robinhood Markets Inc is a finance company in the security brokers, dealers, and flotation companies industry with a market capitalization of $9.26 billion. The stock has a negative earnings per share of -0.82 and a price-to-earnings ratio of 1.979. Market sentiment is mixed with a beta of -0.415, indicating below-average volatility. The company has a total cash of $1.774 billion and a current stock price of $12.34. Despite recent fluctuations, the stock has shown a positive trend with a relative strength index of 0.294. However, caution should be exercised as past performance is not always indicative of future results.
More about Block Inc
Block Inc, Square, Inc. is a technology company in the services-prepackaged software industry with a market cap of $40.43 billion. The stock price is currently at $79.42, with a 52-week high of $0.244 and a 52-week low of -$0.998. The company reported a net income of -$0.46 per share and a total revenue of $20.79 billion. Market sentiment appears to be slightly bearish with a negative price change of -0.0136. The company's performance and financial metrics indicate potential risks and uncertainties in the market.
More about Coinbase Global Inc
Coinbase Global, Inc. provides financial infrastructure and technology for the crypto economy and is headquartered in Wilmington, Delaware. With a market capitalization of $29.85 billion, the company has shown a strong performance with a stock price of $88.29. However, the stock has experienced a recent decline of 3.21%, indicating some short-term bearish sentiment. Despite this, the company has seen a positive 11.3% growth in revenue and a healthy profit margin of 3.27%. The market sentiment towards Coinbase Global Inc. remains positive, but investors should be cautious of potential volatility in the crypto market and the inherent risks associated with this industry.
More about Toast Inc
Toast Inc operates a cloud-based technology platform for the restaurant industry in the United States and Ireland. The company's market cap is $9.36 billion, with a current price-to-earnings ratio of -0.6 and a price-to-sales ratio of 6.83. The company has a negative earnings per share of -0.0862 and a total revenue of $3.597 billion. The stock is currently trading at $19.44 with a beta of 0 and a dividend yield of 0.372. Market sentiment towards Toast Inc is uncertain, with the company facing challenges in profitability and negative earnings, indicating potential risks in investment.
More about Visa Inc. Class A
Visa Inc. Class A is a multinational financial services corporation with a market capitalization of $556.75 billion. The stock is currently trading at $289.09, with a price-to-earnings ratio of 32.68 and a dividend yield of 0.529%. The stock has shown a 1-year return of 8.29% and a 5-year return of 15.95%. Market sentiment towards Visa Inc. is bullish, as it is one of the world's most valuable companies in the business services sector. However, it's important to note that past performance is not always indicative of future results, and there are potential risks associated with investing in Visa Inc., given the uncertainties in the global financial services industry.
More about Mastercard Inc
Mastercard Inc is a multinational financial services corporation with its headquarters in Purchase, New York. The company's principal business is to process payments between the banks of merchants and the card-issuing banks or credit unions of purchasers who use Mastercard brand cards. As of the latest financial data, the company has a market capitalization of $243.67 billion, with a stock price of $466.92. The stock has shown a 2.28% increase in the last trading day and a 11.49% increase over the past month. However, the Relative Strength Index (RSI) is at 25.65, indicating the stock may be oversold. While the company has a strong market presence and financial performance, the current technical indicators suggest a potential reversal or correction in the stock price. Investors should consider the potential risks associated with current market sentiment before making investment decisions.
More about Shift4 Payments Inc
Shift4 Payments Inc provides integrated payment processing and technology solutions in the United States. The company's stock is currently trading at $45.04, with a 1.67% increase. The market sentiment appears to be bullish with a Relative Strength Index (RSI) of 84.49, indicating overbought conditions. However, the stock is currently near resistance levels, suggesting a potential for a pullback. It's important to consider the risks associated with the overbought conditions and potential resistance levels, as past performance is not always indicative of future results.
More about LendingClub Corp
LendingClub Corporation is a banking holding company that offers financial products and services through a technology-driven platform. With a market cap of $871.71 million and a stock price of $16.56, the company has shown a positive 10.96% change in the last year. The Relative Strength Index (RSI) of 44.5 indicates a neutral sentiment in the market. However, the stock has a negative price change of -0.888 and a negative earnings per share (EPS) change of -0.164, suggesting potential risks and uncertainties in the company's performance.
More about SoFi Technologies Inc.
SoFi Technologies Inc. provides digital financial services and is headquartered in San Francisco, California. The company's stock performance has shown a decrease of 0.45% with a market cap of 7.18 billion. The stock has a price-to-earnings ratio of 2.039 and a volume of 1,906,266,000. The market sentiment appears to be neutral with a Relative Strength Index (RSI) of 9.31 and Bollinger Bands showing a deviation of 0.264. The company operates in the real estate and construction sector and is categorized under blank checks. It is important to note that past market behavior is not always a reliable indicator of future performance, and there may be potential risks or uncertainties associated with this analysis.
More about StoneCo Ltd
StoneCo Ltd is a fintech company providing solutions for e-commerce in Brazil. With a market capitalization of $11.17 billion and a stock price of $26.61, the company has shown a consistent growth trend, with a 1-year return of 35.67%. The Relative Strength Index (RSI) of 17.04 indicates that the stock may be oversold, while the Bollinger Bands show a narrow range, suggesting a period of low volatility. However, the stock has recently broken out of a head and shoulders pattern, indicating a potential bullish trend. It is important to note that past performance is not always a reliable indicator of future performance, and there are inherent risks associated with investing in the stock market.
More about PagSeguro Digital Ltd
PagSeguro Digital Ltd provides financial technology solutions and services for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally. The company is headquartered in São Paulo, Brazil. With a market capitalization of $4,028,560,000, the stock is currently trading at $12.86 with a 0% change. The Relative Strength Index (RSI) stands at 47.3, indicating a neutral sentiment. The company's total revenue is $15,325,436,000, with a net income of $12.54 and an earnings per share of $0.097, showing a slight decrease of -0.007. The stock performance seems stable, but the neutral RSI and slight decrease in earnings per share suggest potential uncertainty in the market sentiment.
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