Payments Industry Gradually Emerging
According to Barclays analysts, the payments industry is slowly emerging from a prolonged period of undervaluation. They believe that when the dust from the pandemic settles next year, investors will realize that the industry has changed less than anticipated.
Barclays has upgraded Cognizant Technology Solutions to Equalweight from Underweight and raised its price target to $75 from $61. However, the analysts note that there is still work to be done in righting the ship. The company must show consistent execution and take advantage of an improving macro-backdrop to regain its status as a preferred vendor in the space.
Paychex Sees Potential Stability
Barclays has also upgraded Paychex to Equalweight from Underweight, with a price target of $126, compared to its previous target of $107. The analysts believe that the stock, currently trading below its 5-year forward P/E average, has factored in a potential rise in unemployment. They expect more stability in the stock over the next 12 months, despite macro volatility and a challenging rate environment.
Riskified Faces Challenges
Barclays has downgraded Riskified to Equalweight from Overweight, setting a price target of $5. The analysts attribute this downgrade to inconsistent eCommerce trends and a volatile macro backdrop, which could lead to a shift in spending towards non-discretionary categories.
Green Dot Undergoes Downgrade
Lastly, Barclays has downgraded Green Dot to Underweight from Equalweight and reduced its price target to $7 from $8. The bank awaits further clarity on the company’s strategic path and the evolution of its business model. The analysts comment that the investment and time required to transition away from the legacy model towards a more solidified digital strategy has proven to be more significant than originally expected.
Barclays’ recent report highlights the adjustments in its stance on key players in the Payments, Processors & IT Services sector. These changes reflect the bank’s assessment of market conditions and the performances of these companies.