Jul. 1 at 3:42 PM
Piper Sandler took a selectively positive stance on the payments and consumer finance sector, making several rating changes, including a double upgrade of Block (
$XYZ) from Underweight to Overweight and a Neutral rating on PayPal (
$PYPL).
Analyst Bill Carcache said the sector’s recent underperformance has been driven mainly by valuation multiple compression rather than weakening earnings expectations. The firm’s positive view is based on company-specific catalysts, including Visa and Mastercard’s network resilience and services growth, American Express’s steady compounding profile, Capital One’s earnings upside from its Discover acquisition, Block’s gross profit growth and margin expansion, and
$AFRM resilient recurring loan revenue and path toward scaled GAAP EPS.
PayPal was rated Neutral, as its low valuation is balanced by unresolved pressure on take rates and transaction margins.
