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Investing.com -- Several payments and fintech stocks are pricing in long-term growth rates well below current consensus forecasts, according to a UBS analysis using its HOLT valuation framework.
UBS said the framework, which focuses on companies’ long-term cash-generating ability, points to a disconnect between market-implied growth expectations and analyst forecasts for a number of payments companies.
The analysis compares consensus estimates for the next three years with growth rates implied by current share prices over the 2029-2035 period.
Among the names highlighted, Shopify is pricing in roughly 10% long-term revenue growth, compared with consensus expectations for growth of more than 25% over the next three years.
Toast is pricing in no long-term growth despite consensus forecasts calling for high-teens revenue growth over the same period.
Block is pricing in low single-digit long-term revenue growth on an ex-Bitcoin basis, versus consensus expectations for mid-teens growth over the next three years, UBS said.
Visa and Mastercard appeared less dislocated, with both pricing in about 7% annual revenue growth between 2029 and 2035. That compares with consensus forecasts for low-double-digit growth over the next three years.
UBS also noted that shares of several established payments companies appear to be pricing in negative long-term growth.
According to the firm’s analysis, Fidelity National Information Services and Global Payments are both pricing in annual revenue declines of about 10% between 2029 and 2035, while Fiserv is pricing in a roughly 5% decline.
The report said the broader U.S. payments sector has historically generated returns on capital well above the average U.S. company.
Forecast returns on capital have recovered in recent years, but market-implied expectations remain materially lower, suggesting investors continue to question the durability of the sector’s growth profile.
Separately, UBS said market expectations imply further profitability improvement for lending-focused fintech companies, including Affirm, Klarna, and SoFi.
All three companies are expected to generate positive cash-flow returns on equity beginning in 2026, with investors pricing in additional improvement beyond 2027.