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Visa’s ‘more defensive’ stance makes it well suited for choppy times, Goldman Sachs says – News Opener

Visa Inc.’s “more defensive” positioning just earned it a strong endorsement from a Goldman Sachs analyst.

Goldman’s Will Nance initiated coverage of Visa
V,
+0.14%

and Mastercard Inc.
MA,
+0.49%

shares with buy ratings late Tuesday, but only Visa’s stock cracked Goldman’s Conviction List. While he sees both companies as well positioned to capitalize on a recovery in cross-border spending and increased momentum for electronic payments, he deems Visa’s business mix better suited for the choppy economic landscape.

“While V is clearly exposed to overall macro trends in spending, we are incrementally more constructive on Visa’s US-centric, debit-heavy business mix, which we see as more defensive in times of greater macro uncertainty relative to MA’s more international and credit-centric business,” he wrote in his note to clients.

Nance set a $282 price target on shares of Visa, with the target about 38% above current levels.

As for Mastercard, Nance noted that the company is set up well to benefit from its “multi-rail” strategy that extends beyond debit and credit cards, and he argued that Mastercard deserves to trade at a multiple that’s a “modest premium” over Visa’s, given Mastercard’s more robust earnings growth.

Though he said that Mastercard “represents an attractive combination of long-term growth, margin expansion, and capital returns,” Visa is his preferred name given its skew toward debit and the U.S.

Nance initiated Mastercard’s stock with a $460 price target, which is about 36% above recent levels.

He began coverage of several other payment-oriented names as well, slapping a buy rating on shares of Fidelity National Information Services Inc.
FIS,
-0.33%
,
while taking a neutral stance on shares of Fiserv Inc.
FISV,
-2.36%
,
Global Payments Inc.
GPN,
-2.52%
,
Shift4 Payments Inc.
FOUR,
+2.77%
,
and PAR Technology Corp.
PAR,
+0.41%
.

“Within the large-cap acquirers, we favor FIS, as we believe its banking business should benefit from an acceleration in technology spending, and we also favor its enterprise and e-commerce focused merchant business.”

Nance also assigned a sell rating and $18 price target to shares of Western Union Co.
WU,
-0.80%

“With management conducting a strategic review of the company’s approach and looking to diversify away from its legacy business by offering a broader suite of financial services to its global immigrant customer base, we believe WU’s strong margins/capital allocation could come incrementally under pressure as the company invests in the highly competitive neo-bank space,” he wrote.

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