The KBW predictions are amalgamated into one document known as “Payments 2019 Outlook: When Above-Average Growth Meets Reasonable Valuations”. That does an excellent job of suggesting by itself where KBW thinks the payment sphere is going, but there are more specific points to examine.
First, KBW checked out the sustainability of “above-average trends.” With a comparatively stable—for now—economic backdrop, growth foundations should stay stable. However, even if the economy should change, as it commonly does, payments stocks can be defensive, as the earnings hit might lessen thanks to the previously-seen growth.
Next, valuations came up. While P/E multiples were formerly much higher than normal five-year averages, recent market retractions have brought these more in line with reality. That’s good news for the overall market, as it improves the entry point and draws new interest in the field.
Finally, KBW closed with the””big picture trends” for the year. Real-time payments in the US, Venmo’s monetization, the overall environment, regulations in emerging markets, and the growth of Secure Remote Commerce. Recommended stocks for 2019 feature GPN, Visa, WEX and PayPal, all of which have been previously noted.
Thus, the year ahead looks pretty good, as far as KBW is concerned. I take a bit more of a concern about the overall economic picture; we’ve had one wild couple of years, and a downturn of some kind is pretty much baked into the cake at this stage of the game.
Still, mobile payments have been catching on for some time, and we’re likely to see a lot more positive come out of this even if things take a general downturn.