TLDR
Bernstein kept Outperform ratings on Adyen, Affirm, Visa, Mastercard and Block on November 12.
Toast was cut to Market-Perform, and its price target fell from $45 to $38.
Toast is also one of Adyen’s recent customer wins.
Adyen, Affirm and Block trade at 19, 18 and 16 times 2027 earnings measures.
Bernstein expects Adyen revenue to grow about 21% in 2027.
Bernstein kept Outperform ratings on five payment companies in a research note dated November 12. The list includes Adyen, Affirm, Visa, Mastercard and Block. The firm said the group offers better profits, fair valuations and rising demand for digital payments.
The same note cut Toast to Market-Perform from Outperform. Bernstein also lowered its price target on the restaurant software company from $45 to $38, according to MarketBeat. The firm now takes a more cautious view of its valuation and future growth.
Investing.com reported that analysts were most positive on Adyen and Affirm. Visa and Mastercard were described as attractive longer-term holdings. The note also said strong free cash flow could support share buybacks.
How Bernstein Values Its Five Picks
Adyen trades at about 19 times estimated 2027 earnings. Its cash holdings equal about 16% of its market value. Bernstein calls that valuation attractive for the growth it expects.
The firm expects Adyen’s revenue to rise about 21% in 2027. It points to large customer relationships, expanding payment services and possible share buybacks.
Adyen’s third-quarter update showed net revenue up 23% to €738.1 million. Processed payment volumes rose 30% to €451.1 billion. The company released the figures in its latest business update.
Recent Adyen customer wins include OpenAI, Shopify and Toast. Bernstein also noted demand for its Orb billing platform and Talon.One customer engagement technology.
Affirm trades at about 18 times projected 2027 adjusted operating income. Bernstein says that looks attractive as the buy now, pay later company expands beyond online retail. It sees room in physical stores, international markets and banking partnerships.
Partnerships with Amazon, Shopify and Costco are expected to add to Affirm’s transaction volumes. Bernstein also pointed to growing network effects as more merchants and shoppers use the service.
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.
Visa and Mastercard kept their Outperform ratings because of their global networks and steady earnings growth. Both are expanding into cybersecurity, fraud prevention and other services. Bernstein also named AI shopping agents and payment tokenization as possible new revenue sources.
Risks Bernstein Flagged and the Toast Downgrade
Bernstein said heavy investment spending could weigh on Adyen’s margins for a time. Affirm remains exposed to consumer spending trends, borrowing costs and credit losses. A weaker economy could challenge its earnings expectations.
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 noted limited detail on Block’s lending operations.
For Visa and Mastercard, Bernstein said much of the recent valuation improvement has already happened. That could limit near-term gains. The companies still hold advantages through their large merchant networks and global infrastructure.
Toast was downgraded because of 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.
Toast is also among the customers Adyen recently won. Bernstein rates Adyen Outperform and Toast Market-Perform.
Bernstein’s price target on Toast now stands at $38, down from $45. The firm published the changes on November 12.
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