The Buckingham Research Group has initiated bullish coverage of a handful of payment stocks Monday. Analyst Chris Brendler sees plenty of opportunities for investors to turn a profit in the payment space, and he said the rising tide in payments will lift a number of ships.
Stocks To Own
Brendler said Visa Inc V 0.23% and rival Mastercard Inc MA 0.17% are the two Buy-rated “stocks to own” as they have the strongest underlying fundamentals in the group and are up against limited competition. He said the pair of payment giants should be able to grow earnings by roughly 15 percent annually over the next 10 years. Buckingham has a $129 target for Visa and a $163 target for Mastercard.
Discover
Brendler set a Buy rating for Discover Financial Services DFS 1.08% and said the company is the gold standard in underwriting, customer service and deposit gathering. He also argued that credit concerns aren’t justified and there is plenty of room for earnings upside in coming years. Buckingham has a $74 price target for the stock.
First Data
Brendler also set a Buy rating for First Data Corp FDC 1.91% and said 2018 will be the inflection year for the company as it continues its turnaround efforts. First Data has lagged its payment peers in recent months, but Brendler said a combination of improving free cash flow and deleveraging will help the stock outperform in quarters to come. Buckingham has a $23 price target for the stock.
Capital One
Brendler initiated coverage of Capital One Financial Corp. COF 0.64% at Buy and said the company has one of the best management teams in the business. He says an “imminent turn” in charge-offs and technical streamlining should position Capital one to eliminate its earnings multiple discount in coming months. Buckingham maintains a $99 price target.
PayPal
Paypal Holdings Inc PYPL 0.15% is one of the faces of the next generation of the payments business, and Brendler initiated coverage with a Buy rating. He said PayPal is well-positioned for sustainable 20 percent revenue growth and could easily grow earnings at an even higher rate. Buckingham has a $74 price target for the stock.
Global Payments
Finally, Brendler initiated…
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