Goldman Sachs analyst Will Nance has taken over coverage of payment technology stocks previously covered by Michael Ng, with Buy ratings assigned to Affirm Holdings (NASDAQ:AFRM) and Block, the parent company of Square (NYSE:SQ), while maintaining Neutral ratings for PayPal Holdings (NASDAQ:PYPL) and Marqeta (NASDAQ:MQ).
Affirm (AFRM): In a note to clients, Nance commended AFRM as the leading provider of modern credit solutions for consumers, highlighting its diverse range of products for point of sale financing and everyday spending. Nance expressed admiration for AFRM's advanced underwriting capabilities compared to other fintech companies and its consistent performance in managing credit outcomes, even while outpacing its competitors. The price target for AFRM is set at $42, indicating a 41% potential increase from the closing price of $29.87 on Friday.
Block (SQ): Nance praised Block as a leader in SMB payments and consumer fintech, leveraging its extensive history of innovative product development. He also noted Block's growth in free cash flow and valuation enhancements, including the adoption of a Rule of 40 framework and transitioning to GAAP-based targets. The 12-month price target for Block is $80, suggesting a 27% upside from Friday's closing price of $62.97.
PayPal (PYPL): While recognizing the potential for double-digit EPS growth through cost management, Nance remains cautious about the long-term competitive landscape in branded checkout services where mobile wallets are gaining traction. Concerns regarding increased competition and the lagging performance of PayPal's branded business are already factored into the stock price, with a price target of $89 implying a 14% upside potential from Friday's closing price of $60.61.
Marqeta (MQ): Nance highlighted MQ's leadership in embedded finance for card-based programs, largely driven by the success of Block's Cash App card. He expressed optimism about MQ's commercial initiatives, particularly in early wage access and partnerships such as with Walmart, but indicated potential challenges in consumer fintech due to intense competition in the U.S. market, where Block holds a significant share. The 12-month price target for Marqeta is $5.50, representing a 4.4% increase from Friday's closing price of $5.27.
According to the SA Quant system, all four stocks are currently rated as Hold, while the average SA Analyst rating leans towards Buy, as observed in the Peer Comparison section.
Today, Affirm (AFRM) soared by 6.2%, Block (SQ) rose by 2.6%, PayPal (PYPL) dipped by 0.8%, and Marqeta (MQ) saw a modest increase of 0.5% in morning trading.