KBW: A Look at 2020 in Mobile Payments Comes From Payment Fundamentals

January 17, 2020         By: Steven Anderson

We’ve only been in 2020 for just shy of two weeks now, and already we’re getting some advance looks at the year to come. The latest we got in came from our friends at Keefe, Bruyette & Woods (KBW) took a look at a range of firms in the mobile payments space, or adjacent to it, and revealed that 2020 looks to be about fundamentals and guidance going forward.

The word from KBW, as expressed by analyst Sanjay Sakhrani, notes that 2020 should feature positive earnings growth, which should help drive stock performance this year. Higher valuations, meanwhile, aren’t likely to factor in, but with better earnings, this won’t matter so much. Granted, the broader economic picture—especially as this is an election year in the US—will be an issue, but much of that uncertainty won’t really factor until the last days of 2020.

There will be some issues going into 2020 from the combination of CECL, eBay and Honey. These issues will likely weigh on the larger market, especially as connects to PayPal with the issue of eBay losses and the potential gains from Honey, which PayPal recently completed the deal to land.

Meanwhile, several other firms, including GPN, FIS, Adyen and Visa are all looking to make various moves in the market. Adyen is poised to surpass expectations, and its new connection to McDonald’s makes that point clear. First Data, meanwhile, has been out to drive synergy in the field and help keep its impressive seven percent internal growth going. Visa, however, may be on the bad end of a consensus earnings per share move, depending on how the guidance goes.

The biggest takeaway from the KBW report is that there’s a lot to like in the mobile payments space this year, but just how far it can all go is going to depend, in big fashion, on just what the guidances and the like look like. We know there are a lot of factors going into the field, we know this is a maturing market, and we know that there has already been quite a bit of mergers and acquisitions (M&A) activity going around.

So while we’ll need some more specific guidance to get us into this year, what we know right now suggests that this should be another big year for the mobile payments sector.