KeyBanc Upgrades Visa, Downgrades PayPal, Names Top Fintech Stock Picks for 2023 – Visa (NYSE:V)

Fintech investors had a brutal year in 2022 as rising interest rates and crypto winters weighed on growth rates and investor sentiment. On Monday, a Wall Street analyst adjusted coverage of several of the top fintech stocks and named his top three fintech stock picks for 2023.

The analyst: KeyBanc analyst Josh Beck issued the following rating changes for fintech stocks under his coverage:

• Fidelity National Information Servcs Inc FIS downgraded from overweight to sector weight, maintained price target of $75.
• PayPal Holdings Inc PYPL downgraded from overweight to sector weight, price target reduced from $100 to $80.
• i3 Verticals Inc III IV upgraded from sector weight to overweight, price target raised from $22 to $30.
• Mastercard Inc MA upgraded from sector weight to overweight, price target raised from $305 to $425.
• Visa Inc V upgraded from sector weight to overweight, price target raised from $187 to $250.

Related Link: Analyst Cuts Tesla Price Target by 50%, Names Best Auto Stock Picks for 2023

In addition to the rating changes, Beck also cut overweight price targets Robinhood Markets Inc HOOD from $13 to $12, Marqeta Inc MQ from $10 to $9, Nu Holdings Ltd NOW from $6 to $5 and Global Payments Inc GPN from $140 to $115.

The thesis: Beck said Monday that his top fintech ideas for 2023 include companies that have underestimated growth opportunities and profitable business models. He said Block Inc SQ is a top pick in 2023 because of the Cash App monetization opportunities. Additionally, he said credit card giants Visa and Mastercard are the best stock picks because travel headwinds have subsided and peer-to-peer and business-to-business payments have created growth and diversification opportunities beyond their credit card businesses.

“Embedded Finance is reshaping the FinTech & Enabling Software value chain, refreshing a thesis that favors key ideas like SQ on undervalued growth sustainability and profitability upside (KBCM over Street on EBITDA), while seeing new payment streams (>50% of our multi-year growth) ) expands the growth trajectory at V and MA,” Beck said.

Related Link: Why the Fintech IPO Window Is ‘Essentially Closed’ in 2022

Benzinga’s Take: Investors were bombarded with dozens of exciting fintech IPOs in recent years, only to see most of those stocks get crushed right out of the gates as rising interest rates triggered a sell-off in risky assets. Many of these fintech startups may not survive the recent downturn, but there is no doubt that the market leaders have long and massive growth opportunities as the next generation of financial services emerges over the next decade.