Seaport analyst Jeff Cantwell initiated coverage Thursday of the fintech sector, including BILL Holdings, Inc (NYSE:BILL), Fiserv, Inc (NYSE:FI), Fidelity National Information Services, Inc (NYSE:FIS), Flywire Corp (NASDAQ:FLYW), Global Payments Inc (NYSE:GPN), Mastercard Inc (NYSE:MA), PayPal Holdings, Inc (NASDAQ:PYPL), Shopify Inc (NYSE:SHOP), Block, Inc (NYSE:SQ), Visa Inc (NYSE:V).

Fiserv (Neutral) is a well-managed company, and shares have outperformed over the past two years due to its strong top-line growth, but he expects an eventual slowdown in FY24 and beyond due to impacts from higher for longer interest rates. The bottom line is that Fiserv is a quality compounder, but the stock looks pricey on a relative basis.

Flywire (Buy; $40 price target) is a high-quality software/payments company with a solid top-line story and a growing focus on its margins and profitability. Annual revenue growth of 30% looks achievable for Flywire as it continues to penetrate the sizeable TAMs of its four key verticals.

Global Payments (Buy; $140 price target) has successfully repositioned itself in its Merchant and Issuer segments over the past year. He thinks the company is now well positioned to accelerate its revenue and earnings growth in the next two years, eventually resulting in the stock rerating. He expects further headway by GPN in B2B, which is noteworthy due to its sizeable TAM.

Given Mastercard’s (Buy; $465 price target) positioning as a high-quality company, a relatively defensive name in the space, and with the company’s EPS growth expected to be in the mid-to-high teens in FY24 and FY25, notwithstanding the coming macro slowdown, he thinks Mastercard can “thread the needle,” and its shares can appreciate from here. 

New CEO Alex Chriss’ arrival creates a fresh opportunity for PayPal (Neutral) to reinvigorate investors’ expectations about the company’s outlook. Meanwhile, macro remains an ongoing headwind for PayPal, and looking ahead, he sees greater risk for downside than the potential for upside to consensus FY24 and FY25 revenue and EPS estimates, on higher for longer impacts. 

Shopify (Buy; $64 price target) is transitioning towards becoming the software and payments’ platform-of-choice’ for a much more comprehensive range of merchants than its traditional base of SMBs, including enterprise-sized customers. He expects a substantial expansion in Shopify’s revenue over the next two years, on sustained strong growth in GMV/GPV coupled with healthy attach. He is above consensus revenue in FY24 and FY25. Concurrently, he sees an opportunity for Shopify to improve substantially on profitability. 

He likes Visa (Neutral)  for its overall quality, moat, and unique blend of offensive and defensive attributes, which serves investors well in this challenging market environment. However, the macro is teetering, and expect both consumer and commercial spending to slow from here. Meanwhile, client incentives are rising for Visa over time and clawing into gross revenue (>27% of gross revenues in FY23). The bottom line is that he is below consensus revenue and EPS in FY24 and FY25.