Analyst Believes Value Of Core Square Seller, Branded Paypal Checkout, FIS Bank Software Assets 'Undemanding'

KeyBanc analyst Josh Beck ran a SoTP analysis across extensive cap FinTech and walked away the most positive on Block, Inc SQ (reiterated Overweight, price target $90), PayPal Holdings, Inc PYPL (reiterated Overweight, price target $115), and Fidelity National Information Services, Inc FIS (reiterated Overweight, price target $115).
He believes the value of core Square seller, branded Paypal checkout, and FIS bank software assets are relatively undemanding.
At SQ, he ascribes a modest discount across four segments to support his $90 price target, with the majority of the value driven by the Square seller business at 10x EV/GP (versus Toast, Inc TOST at 11x).
For PYPL, he ascribes a mid-teens EV/GP multiple for Venmo and Braintree (versus ADYEN NV ADYYF at 18x), which implies a ~7.5x EV/GP multiple for key value driver branded PayPal.
FIS stands out favorably among the processors, with its price target derived primarily from bank software based on multiples similar to public peers across segments.
At a portfolio level, he remains selective within his FinTech sector coverage as he continues to see a narrow path of taming inflation without consumer and 2023 outlook disruption.
For Visa Inc V (reiterated Sectorweight, price target NA) and Mastercard Inc MA (reiterated Sectorweight, price target NA), he looks for macro, regulatory, and new flows & services clarity despite the overall business model and x-border optimism.
Price Action: SQ shares traded lower by 0.46% at $55.67 on the last check Friday.