Investing.com — Bernstein has named its preferred stocks in the payments sector, citing attractive valuations, expanding growth opportunities and the potential for stronger shareholder returns, while downgrading Toast to Market-Perform.
Analysts said the sector continued to offer upside from high free cash flow yields, capital returns and potential strategic transactions.
1. Adyen NV (AS:ADYEN) – Outperform: Bernstein sees the Dutch payments company’s shares as inexpensive at 19 times estimated 2027 earnings, with cash representing about 16% of its market capitalisation.
Analysts expect revenue growth of around 21% in 2027 and see potential buybacks, while recent customer wins, including OpenAI, Shopify and Toast, and demand for its Orb and Talon One products could support growth.
2. Affirm Holdings (NASDAQ:AFRM) – Outperform: The buy-now-pay-later provider trades at about 18 times estimated 2027 adjusted operating income, which Bernstein considers attractive.
Analysts cited expanding addressable markets, growing network effects and opportunities in international markets, in-store payments and bank partnerships. Recent wins with Costco, Shopify and Amazon could contribute to growth in 2027.
3. Visa (NYSE:V) and Mastercard (NYSE:MA) – Outperform: Bernstein remains positive on their earnings growth, competitive advantages and expanding value-added services, including cybersecurity and fraud prevention.
Agentic commerce and tokenisation offer additional opportunities, although analysts said much of the recent valuation re-rating has already occurred.
4. Block Inc (NYSE:XYZ) – Outperform: Bernstein sees attractive valuation at 16 times estimated 2027 non-GAAP earnings, supported by improving Square gross payment volume and Cash App profitability.
However, concerns over primary banking customer growth and transparency around its lending business keep it outside the top three picks.
Original Article
Bernstein names its top payments stock picks
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