Goldman Sachs Group analysts recently began coverage of 15 stocks in the financial technology sector, giving “buy” ratings to seven companies.
Goldman put Mastercard and Fiserv on its “conviction list,” its most bullish picks, Barron's explained.
Among the credit card giants, Mastercard (MA) and Visa (V) are both initiated at buy.
Mastercard’s growth in its core consumer card segment is “likely to outpace peers given exposure to Europe and growth markets where MA is gaining share,” analyst Matthew O’Neill said in a research note, adding that a pending acquisition of Danish payment company Nets could accelerate its position in the region.
Goldman’s price target for Mastercard is $364 a share. The price target for Visa is $223.
Fiserv (FISV) is Goldman’s best pick among firms that process digital payment transactions. Stable growth and cost efficiency are the key in its valuation.
“We believe FISV has one of the most defensive business models in our coverage given a majority of revenue is derived from services which are critical to support bank operations and less sensitive to the macro environment,” O’Neill said.
Goldman’s target price for Fiserv is $125.
Two other “deal stocks” with aggressive M&A activities in the payment processing space— Fidelity National Information Services (FIS) and Global Payments (GPN)—also received buy ratings.
Goldman also gave buy ratings to Open Lending (LPRO), which provides an automated near-prime loan platform for financial institutions, and business payments company FleetCor Technologies (FLT), projecting 28% and 21% upside potential, respectively, from their current prices.
Meanwhile, investments in Israeli financial technology firms rose 107% in 2019 to a record $1.8 billion, according to a report released on Wednesday by Start-Up Nation Central.
Israel ranks fifth in fintech investments after China, the United States, the United Kingdom and India and accounts for 5.1% of global investments in this field, Reuters explained.
Six of the capital rounds raised by Israeli fintech companies in 2019 exceeded $100 million, compared with only one in the previous year. These included Lemonade, which raised $300 million and Next Insurance, which raised $250 million.
Start-Up National Central, a non-profit organisation, said the fintech industry is not immune to the shock experienced by other technology sectors in the wake of the coronavirus crisis.
“Foreign investors may want to maintain their distance now, while the local ones will focus on protecting their portfolio companies,” said Yair Fonarov, head of the fintech sector at Start-Up Nation Central. “The younger companies will therefore have a harder time finding investors.”
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