Bank of America highlights top global payment picks
2min read The Bank of America (BofA) report on global payment systems highlights recent developments and provides investment recommendations across key players in the payments, processors, and IT services sectors. Below is a summary outlining the main insights, including which stocks are viewed favorably and which require caution.
1. Affirm (AFRM) continues to show strong growth, with consumer electronics and travel leading volumes during the Black Friday and Cyber Monday (BFCM) period. A new $4 billion forward flow agreement with Sixth Street underlines Affirm's ability to secure funding. Analysts expect further upside, given improving partnerships like Shopify and expanded Apple Pay integrations. Affirm is rated a “Buy,” signaling its growth trajectory and promising partnerships.
2. Global Payments (GPN) is another favored name. Despite divestitures like AdvancedMD, the company’s robust buyback strategy positions it for 10% EPS growth in 2025. Analysts are optimistic about its Merchant organic growth and free cash flow (FCF) outlook. However, challenges in foreign exchange and Issuer segment growth are noted. GPN remains a “Buy,” with its M&A-driven strategy and operational efficiency drawing attention.
3. Fiserv (FI) and Fidelity National Information Services (FIS) are also highlighted as attractive “Buy”-rated stocks. Fiserv's Clover platform has demonstrated consistent growth, even with tough year-over-year comparisons, and new product rollouts are expected to drive future revenues. FIS, while navigating slower growth in its Banking segment, sees strength from acquisitions like Dragonfly and expects margin improvement and deal ramps to accelerate recurring revenue growth in 2025.
4. PayPal (PYPL) is identified as a promising opportunity, rated “Buy” with achievable estimates for 2024 and 2025. Challenges like slower Braintree growth are balanced by the company's strategic focus on transaction profitability and value-added services. Venmo remains a growth area, though its revenue base is smaller than expected. Analysts are optimistic about its multi-year financial framework set to be unveiled at its February Investor Day.
5. In contrast, Shift4 (FOUR) and Cognizant (CTSH) are rated "Neutral," reflecting limited near-term upside. Shift4 is facing uncertainties related to leadership transitions and potential macroeconomic pressures on restaurant and hospitality volumes. Similarly, Cognizant is seeing softness in certain verticals like Communications & Media, though Banking and Health Sciences offer pockets of strength. Analysts suggest waiting for clearer signs of growth reacceleration.
6. Flywire (FLYW) is another name requiring caution, despite its “Buy” rating. While the company maintains strong growth in its Travel vertical, education-sector concentration and foreign exchange headwinds are notable risks. Globant (GLOB) also remains a “Neutral” amid soft discretionary spending in IT services and challenges in Latin America due to macroeconomic uncertainty.
Overall, analysts highlight Affirm, Fiserv, Fidelity National, PayPal, and Global Payments as attractive names to watch for strong growth and operational execution. In contrast Shift4, Cognizant, and Globant warrant more caution due to their mixed growth outlooks and ongoing challenges. Investors are advised to monitor industry developments like M&A activity, foreign exchange trends, and the adoption of innovative products to gauge long-term potential.
