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The top fintech stocks to own in 2024, according to BTIG
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The top fintech stocks to own in 2024, according to BTIG

Looking forward to 2024, BTIG encourages investors to judge financial technology, or “fintech,” companies on their ability to add customers over the next year, rather than by the amount of payment volume processed. The firm believes Lightspeed Commerce (LSPD) and Toast (TOST) will be able to grow in 2024 even if gross payment volume, or GPV, per location declines meaningfully. The firm also reiterates Shift4 Payments (FOUR) as its BTIG Top Pick as it sees the company’s ability to gain new customers via value-add services, while also unlocking captive payment volumes within existing customers.

THEMES FOR 2024: BTIG sees three themes in the consumer facing payments space that investors should be tuned into, namely merchants being able to meet ever-changing consumer payment preferences, commerce to continue to globalize and fintech companies needing to serve merchants worldwide, and the fact the firm sees 2024 as the year of efficiency for both fintech and their merchant customers. While BTIG is cognizant of the overhang relating to consumer spending trends in the year ahead, the firm notes consumer payment volumes are just one leg of growth for payment companies, and that value-added services are what drive merchants to platforms, not the simple ability to accept or reject a payment. As such, it encourages investors to judge fintech on their ability to add customers over the next year, rather than by the amount of payment volume processed, as the former is much more in their control and the latter will ebb and flow with the broader economy.

BTIG expects Lightspeed Commerce and Toast to be able to grow in 2024 even if GPV/Location declines meaningfully. The firm also reiterates Shift4 Payments as its BTIG Top Pick as it sees the company’s ability to gain new customers via value-add services, while also unlocking captive payment volumes within existing customers as providing the best investment opportunity when paired with the stock’s attractive EV/EBITDA multiple.

BEST POSITIONED STOCKS: The firm favors stocks that can grow revenue independent of consumer spending trends. Specifically, BTIG see Shift4 Payments, Flywire (FLYW), and Lightspeed Commerce as best positioned to unlock value within their existing merchant base. Further, the firm expects Shift4 to execute on its gateway conversion program and unlock international payment volumes, Flywire to deepen its relationship with existing customers by adding domestic payments to accompany cross-border services among other initiatives, and Lightspeed to drive revenue growth as it executes on its payments mandate. It also sees PAR Technology (PAR) and Toast as well positioned to add enterprise and SMB customers, respectively, as their software should appeal to restaurants looking to improve operations.

BTIG believes a key way for its coverage to grow market share is by enabling merchants to accept payments in the consumer’s preferred method. The firm thinks companies that own their payment networks such as Shift4 and Flywire will be beneficiaries of payment preference shifts insofar as the former has demonstrated the ability to allow its merchants to accept 100-plus payment methods and 160-plus currencies, while the latter has shared with BTIG in the past that it has the ability to plug RTP rails into its network if there was customer demand for it, as an example.

PRICE ACTION: In Thursday morning trading, shares of Lightspeed and Toast have dropped almost 1%, while Shift4’s stock is fractionally down at $64.54.

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