Affirm, Block assumed by Goldman analyst at Buy; PayPal, Marqeta at Neutral

Goldman Sachs analyst Will Nance assumed coverage of four payment technology stocks from Michael Ng, with Buy ratings on Affirm Holdings (NASDAQ:AFRM) and Square-parent Block (NYSE:SQ) and Neutral ratings on PayPal Holdings (NASDAQ:PYPL) and Marqeta (NASDAQ:MQ).

Affirm (AFRM): “We view AFRM as the leading provider of modern credit solutions for consumers, with a diverse portfolio of products for point of sale financing, and every day spending,” Nance wrote in a note to clients. “We are particularly impressed with the sophistication of AFRM’s underwriting relative to other fintechs, and the company’s strong track record of achieving well managed credit outcomes despite growing faster than peers.”

Price target is $42, implying a 41% upside to AFRM’s closing price of $29.87 on Friday.

Block (SQ): Nance calls the company “one of the leaders in SMB (small-to-medium-sized business) payments and consumer fintech, capitalizing on its long history of product-led innovation.” He also points to Block (SQ) scaling up its free cash flow and valuation support, introducing a Rule of 40 framework, moving to GAAP-based targets, “and is still expecting mid-teens gross profit growth.”

12-month price target of $80 implies 27% upside to its $62.97 close on Friday.

PayPal (PYPL): “While we see room on the cost side to maintain double-digit EPS growth, ultimately we remain cautious on branded checkout competitive dynamics longer term, as mobile-based wallets continue to gain share,” Nance wrote. The worry over competition from increased competition and that PayPal’s branded business will continue to lag overall e-commerce is already priced into the stock’s price, he added.

Price target, at $89, implies 14% upside potential for the stock from Friday’s close of $60.61.

Marqeta (MQ): Much of MQ’s leadership in embedded finance for card-based programs is driven by the success of Block’s (SQ) Cash App card. Nance said he’s constructive on MQ’s intermediate-term outlook on the scaling of its commercial initiatives, “particularly in early wage access and its partnership with WMT [Walmart] as well as commercial card volumes.” However, the outlook is more mixed for consumer fintech as the U.S.’s highest market share is held by MQ’s largest partner, Block (SQ), making MQ’s growth more dependent on competing in international markets and maintaining economics with Block, he said.

12-month price target of $5.50 implies upside potential of 4.4% to Marqeta’s (MQ) Friday close of $5.27.

SA Quant system rates all four stocks at Hold, while the average SA Analyst rating is Buy, as seen in the Peer Comparison tab.

In Monday morning trading, Affirm (AFRM) stock jumped 6.2%, Block (SQ) gained 2.6%, PayPal (PYPL) slipped 0.8%, and Marqeta (MQ) increased 0.5%.