RBC Capital analyst Daniel. R. Perlin looked forward to the Fintech Conference on June 14. Investor feedback was generally constructive, with most investors focused on which names in its universe have the higher probability for positive revisions in 2H/22 versus names at risk.
Perlin reviewed the past 12-months estimate revision patterns for its payments names, which showed that the market's preference for stability vs. growth was highly tied to revision patterns while also highlighting some dislocations in stock performance relative to fundamentals.
Not surprisingly, the most stable group and ultimately the best relative performers were the networks (Visa Inc V/Mastercard Inc MA), followed by the traditional acquirers (Fidelity National Information Services, Inc FIS, Fiserv, Inc FISV, and Global Payments Inc GPN).
However, Perlin believes Shift4 Payments, Inc FOUR and Flywire Corp FLYW, likely to see positive revision momentum, created dislocations between fundamentals and stock price performance, leading to the best risk/reward opportunities in its payments universe.
With the market remaining volatile, which Perlin believed created a more favorable risk/reward scenario for several names, he reviewed the pecking order for its payments universe.
In order of preference, Perlin prefers FOUR, FLYW, FIS, GPN, FISV, V, MA, Block, Inc SQ, Lightspeed Commerce Inc LSPD, and PayPal Holdings, Inc PYPL.
Apple Inc's AAPL launch of Apple Pay Later will likely intensify competition in the BNPL market.
However, Perlin believes the market will continue to consolidate around the key players, including Affirm Holdings, Inc AFRM, SQ, PYPL, Klarna, and now Apple, with user preference being determined by a combination of the type of underwriting necessary for the consumer to attain a specific good or service and ability to target the consumer, which will prove crucial in sustaining merchant uplift and thus MDRs.
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