Sector Snap: Payment processing group downgraded

Analyst downgrades payment processors over weakened growth prospects

• On 4:28 pm EDT, Monday September 21, 2009

PHILADELPHIA (AP) -- An analyst downgraded the payment processing sector on Monday over weakened growth prospects as the sluggish U.S. economy continues to weigh on consumers.

Goldman Sachs analyst Julio Quinteros Jr. downgraded the group to "Neutral" from "Attractive" as sales remain under pressure, unemployment continues to rise and interest rates remain low.

But he remains favorable about MasterCard Inc., Visa Inc. and Western Union Co., for which he has "Buy" recommendations due to their direct consumer exposure, scale and long-term growth prospects.

He maintained his "Sell" recommendation on Total System Services Inc. due to its exposure in the credit issuance market, which is contracting. He also has a "Sell" rating on Paychex Inc., citing limited growth prospects coming from its depressed small and medium-sized business customers.

Shares of MasterCard fell 95 cents to close at $222.62. Visa was down 40 cents to $73.39 while Western Union finished down 7 cents at $19.49.

Total System Services shares ended up 11 cents to $16.13 while Paychex was up 19 cents to $29.87.