TLDR
- Bernstein kept Outperform ratings on Adyen, Affirm, Visa, Mastercard and Block on November 12.
- Adyen trades at about 19 times 2027 earnings, Affirm at 18 times and Block at 16 times.
- Bernstein expects Adyen’s revenue to grow about 21% in 2027.
- Toast was cut to Market-Perform from Outperform.
- Toast’s price target fell from $45 to $38.
Bernstein named Adyen, Affirm, Visa, Mastercard and Block as its preferred payment stocks in a research note on November 12. The firm kept an Outperform rating on all five companies. It pointed to better profits, fair valuations and rising demand for digital payments.
The note gave specific earnings multiples for Adyen, Affirm and Block, according to Investing.com. Analysts were especially upbeat on Adyen and Affirm. Bernstein also said strong free cash flow could support share buybacks and shareholder returns.
Bernstein also cut Toast to Market-Perform from Outperform. It lowered its price target on the restaurant software company from $45 to $38, according to MarketBeat. The firm now takes a more careful view of its valuation and growth.
How Bernstein Values Its Top Picks
Adyen trades at about 19 times estimated 2027 earnings. Its cash holdings equal roughly 16% of its market value. Bernstein calls that valuation attractive for the growth it expects.
Bernstein expects Adyen’s revenue to grow about 21% in 2027. The firm points to large customer relationships, expanding payment services and possible share buybacks.
Recent customer wins for Adyen include OpenAI, Shopify and Toast. Bernstein also noted demand for its Orb billing platform and Talon.One customer engagement technology.
Adyen’s latest third-quarter update showed net revenue up 23% to €738.1 million. Processed payment volumes rose 30% to €451.1 billion. The company reported the figures in its business update.
Affirm trades at about 18 times projected 2027 adjusted operating income. Bernstein considers that attractive as the buy now, pay later lender grows beyond online retail. Partnerships with Amazon, Shopify and Costco are expected to add to transaction volumes.
Block, the parent of Square and Cash App, trades at about 16 times estimated 2027 non-GAAP earnings. Bernstein cited improving Square payment volumes and stronger Cash App profits. It also gave the company an Outperform rating.
Visa and Mastercard also kept Outperform ratings. Bernstein cited their global payment networks and steady earnings growth. The firm said both are expanding into cybersecurity, fraud prevention and other services, and that they remain attractive longer-term investments.
Risks Bernstein Flagged
Bernstein said high spending on investment could weigh on Adyen’s margins for a time. The firm did not change its positive view of the company.
Affirm remains exposed to consumer spending trends, borrowing costs and credit losses. A weaker economy could challenge earnings expectations. Bernstein also highlighted its growing network effects as more merchants and shoppers use the service.
Block did not make Bernstein’s top three picks. Analysts raised concerns about growth in customers using Cash App as their main bank. They also pointed to limited detail on Block’s lending operations.
For Visa and Mastercard, Bernstein said much of the recent improvement in valuations has already happened. That could limit near-term upside. The firm also named AI shopping agents and payment tokenization as possible new revenue sources.
The Toast downgrade reflects concerns about competition and the cost of sustaining growth. Bernstein also questioned whether hopes for AI-driven improvements are already reflected in the share price. Its price target on Toast now stands at $38.
