Though technology stocks have been through rough times in recent years, it’s still worth revisiting some of the market’s top fintech innovators — MA, SQ, and NVEI — while they continue to play the long game, even as rates rise. Despite the wave of volatility and uncertainty faced by the beaten-down fintech stocks, it’s noteworthy that many Wall Street analysts continue to pound the table on them.
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Undoubtedly, artificial intelligence (AI) and weight-loss drugs like Ozempic are the hot trends to bet on these days. However, let’s not forget about the trends (like fintech and digital payments) that had investors euphoric just over two years ago.
The landscape in financial payments and fintech has changed amid a slumping economy and a more deliberate consumer. But so, too, have expectations, with investor euphoria during the peak days of 2021 now replaced with a more realistic, perhaps overly-conservative view. In any case, the long-term trajectory still seems compelling for those brave enough to dip into the volatility as others bail.
Therefore, let’s use TipRanks’ comparison tool to check in with three solid fintech plays that still have the confidence of Wall Street investors.
Block (NYSE:SQ)
Kicking things off, we have Block, formerly Square, which may be the most intriguing fintech stock to consider buying on the recent dip. After all, the company is headed by “Block Head” and visionary Jack Dorsey, the man who co-founded Twitter (now known as X) from the ground up.
Block seems to have a bit of an identity issue over the past few years. While Square Payments is still a big piece of the pie, the firm seems fully focused on the future. Whether it’s Bitcoin (BTC-USD), its own cryptocurrency, or another fintech innovation on the blockchain, I continue to see Block as one of the best ways to play blockchain innovation if you’re still enthused to bet on the technology that seems to have taken a backseat to AI and VR headsets. Despite recent volatility, I’m staying bullish on Block stock.
The stock is off 84% from its all-time high hit back in 2021. Unlike other tech stocks, SQ stock hasn’t enjoyed much relief, with shares recently hitting multi-year lows of less than $41 per share. Square CEO Alyssa Henry is leaving the company this month, with Dorsey expected to step in. Undoubtedly, the unexpected move introduces another layer of uncertainty to an already perplexing growth story.
It’s hard to stay confident in the firm as it does its best to balance high growth with better margins. In any case, I think the strong network over at Cash App and Dorsey’s expertise may be enough reason to give the stock a chance while shares trade at around 18 times forward price-to-earnings (below the 107.4 times five-year historical average).
What is the Price Target of SQ Stock?
Block is a Strong Buy on TipRanks based on 24 Buys and six Holds assigned by analysts in the past three months. The average SQ stock price target of $81.11 implies 76.3% upside potential.
Mastercard (NYSE:MA)
Mastercard is arguably the tech-savviest credit card company at this juncture. The firm’s chief marketing officer (CMO Raja Rajamannar) recently opened up about Web3, Non-Fungible Tokens, or NFTs (remember that buzzy term?), and other intriguing technologies that still hold great potential.
As others look away from NFTs and the blockchain in favor of generative AI, I think Mastercard is smart to continue exploring the potential behind such technologies. For now, I’m staying bullish on Mastercard, which I view as much as a fintech innovator as a payments processor.
Even if its innovative endeavors never pay off, the company has a rock-solid business that stands to win as the consumer heals while an increasing number of payments go digital. Despite economic headwinds, the company’s chief U.S. economist, Michelle Meyer, sees retail sales rising by 3.7% for the holiday quarter. As the consumer prospers and recovers, so too will Mastercard. All the while, the firm will be busy exploring new financial technologies to add to its already wide moat.
For now, the stock trades at a lofty 37 times trailing price-to-earnings, a huge premium to the credit services industry average of 20.6 times, and it’s down just 4.3% from its all-time high. The stock may not be dirt cheap, but it doesn’t deserve to be, given its relatively steady footing ahead of a potential recession year.
What is the Price Target of MA Stock?
Mastercard’s a Strong Buy, according to analysts, with 19 Buys and one Hold assigned in the past three months. The average MA stock price target of $465.06 implies 16.2% upside potential.
Nuvei (NASDAQ:NVEI)
Nuvei is a lesser-known Canadian fintech company that strikes me as a deep value play at current levels. The stock has shed around 89% of its value from its 2021 peak levels and has struggled to form a bottom over the past two years. Despite the ugly chart, the mid-cap gem ($2.2 billion market cap) continues landing new deals and launching new offerings.
Last week, the firm launched its enhanced payments solution for B2B customers. It’s one of many intriguing moves Nuvei has made over the past few years. Though the recent slew of events (and a shout-out from movie star Ryan Reynolds) hasn’t been able to garner much enthusiasm, I find it noteworthy that the company’s founder and CEO, Philip Fayer, has been eating his own cooking, recently acquiring over 22,000 subordinate voting shares in the company. I’m also bullish on the name as a deep-value play on fintech.
That’s an encouraging sign, while shares go for less than eight times forward price-to-earnings, well below the infrastructure software industry average of 25.6 times. What’s even more encouraging? More than a handful of analysts expect triple-digit-percentage upside from the firm.
What is the Price Target of NVEI Stock?
Nuvei is a Strong Buy, according to analysts, with the stock sporting 11 Buys and one Hold. The average NVEI stock price target of $31.25 entails a 95.6% gain from here.
The Takeaway
You no longer have to pay up for top-notch fintech exposure as hype-driven investors focus on other trends. The following trio seem to be undervalued despite still possessing innovative capabilities. Right now, analysts see the most upside potential from the Montreal-based payments firm Nuvei, with almost 100% upside expected from current levels.
