September 23, 2022 2:23 PM | 2 min read
- KeyBanc analyst Josh Beck ran a SoTP analysis across extensive cap FinTech and walked away the most positive on Block, Inc SQ (reiterated Overweight, price target $90), PayPal Holdings, Inc PYPL (reiterated Overweight, price target $115), and Fidelity National Information Services, Inc FIS (reiterated Overweight, price target $115).
- He believes the value of core Square seller, branded Paypal checkout, and FIS bank software assets are relatively undemanding.
- At SQ, he ascribes a modest discount across four segments to support his $90 price target, with the majority of the value driven by the Square seller business at 10x EV/GP (versus Toast, Inc TOST at 11x).
- For PYPL, he ascribes a mid-teens EV/GP multiple for Venmo and Braintree (versus ADYEN NV ADYYF at 18x), which implies a ~7.5x EV/GP multiple for key value driver branded PayPal.
- FIS stands out favorably among the processors, with its price target derived primarily from bank software based on multiples similar to public peers across segments.
- At a portfolio level, he remains selective within his FinTech sector coverage as he continues to see a narrow path of taming inflation without consumer and 2023 outlook disruption.
- For Visa Inc V (reiterated Sectorweight, price target NA) and Mastercard Inc MA (reiterated Sectorweight, price target NA), he looks for macro, regulatory, and new flows & services clarity despite the overall business model and x-border optimism.
- Price Action: SQ shares traded lower by 0.46% at $55.67 on the last check Friday.
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