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Wall Street Weighs In: Two Analyst's Favorite Stocks In The Payments Space

Wayne Duggan

A pair of Wall Street powerhouses have weighed in on their 2018 outlooks for payment stocks. Analysts from both firms are bullish on their top payment names heading into what could be a big year for investors. 

Bank Of America Weighs In

On Friday, Bank of America analyst Jason Kupferberg said Visa Inc (NYSE: V), Mastercard Inc (NYSE: MA) and Paypal Holdings Inc (NASDAQ: PYPL) are the gold standards in electronic payments.

“We like the scarcity value of PYPL - $88B market cap, pure-play on online/digital payments, 18-20 percent organic revenue growth, stable/improving margins, balance sheet optionality,” Kupferberg said. He also said he prefers Visa over Mastercard based on the stock’s relative valuation.

In the processors space, Kupferberg said Automatic Data Processing (NASDAQ: ADP) is a top pick.

Goldman’s Take

On Monday, Goldman Sachs analyst James Schneider jumped in with his top payment stock picks. Stock valuations, software assets and business-to-business payments will be among the leading themes for payments investors in 2018, he said. 

ADP is Goldman's top contrarian payment stock pick for 2018 thanks to the Street’s relatively low expectations for margin expansion, the analyst said. Schneider echoed Bank of America’s love for large cap stock picks Visa and Mastercard.

“We see MA benefiting from its early lead in B2B,” he said, adding that both companies could find tailwinds from Europe and emerging markets in the coming year.

Ratings And Targets

Bank of America has the following ratings and price targets for payment stocks:

  • Buy rating and $170 target for Mastercard.
  • Buy rating and $88 target for Paypal.
  • Buy rating and $126 target for Visa.
  • Buy rating and $131 target for ADP.

Goldman Sachs has the following ratings and price targets for the stocks mentioned:

  • Buy rating and $128 target for Visa.
  • Buy rating and $176 target for Mastercard.
  • Buy rating and $89 target for Paypal.
  • Buy rating and $135 target for ADP.

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