Worldline's Concerns Impact FinTech Sector, Analyst Says Affirm and Block's Reactions Unwarranted with Limited EU Exposure

Worldline's warning of a "macroeconomic deterioration" in core geographies like Germany hurts the entire FinTech sector pre-market, Mizuho analyst Dan Dolev noted.

Key stocks like Affirm Holdings, Inc AFRM (Buy rating, price target $24), Block, Inc SQ, and PayPal Holdings, Inc PYPL (Buy rating, price target $92) are each trading down. 

Dolev views the worries as overblown as Visa Inc V (Neutral rating, price target $240) specifically did not call out a recession in its initial FY24 guide, which it provided yesterday. 

Plus, when asked about Europe, Visa's CEO mentioned "resiliency" and feeling "good about what's happening" in the EU ex. UK. 

As per Dolev, stocks like AFRM and SQ have little to no exposure to Germany & Europe, which means the adverse stock reactions are unmerited.

Dolev noted Affirm trading ahead of the peer group is appropriate given AFRM's position as the market leader in BNPL and continues to improve on adjusted profitability prospects. 

Mastercard Inc MA (Buy rating, price target $435) trades at a slight premium to peer V as MA has less exposure to debit (which faces more medium-term challenges than credit) and less reliance on the U.S., where card penetration is much higher than in many international markets.

Given recent challenges, PayPal trades to V & MA at a discount.

Price Action: AFRM shares traded higher by 5.83% at $17.61 on the last check Thursday.