Barclays downgrades Worldpay over growth questions

Barclays downgraded Worldpay to 'equal weight' on Wednesday as it raised some questions about the payment group's growth ambitions.

The bank, which left its price target unchanged at 315p, said "we cannot find enough upside to warrant a price target increase and we have some concern regarding the organic growth trend"

WPG has endured many one-off revenue impacts, which Barclays analyst Gerardus Vos attempted to exclude in order to root out an underlying organic growth trend: this showed that the business slowed in each of the last three half years.

Calculating that underlying organic growth peaked at 9.6% in the first half of 2015 and slowed to 6.3% in the second half of last year, he calculated that Worldpay is able to generate around 8-9% organic growth, with anything higher requiring market share gains, pricing or value chain expansion.

"We suspect that some is transitory due to the US, management turnover and the platform transition, but there is a risk that Worldpay could miss its organic growth target of 9-11% in FY17."

Therefore Vos said the rating was going to "take a pause" from the previous 'overweight' in order to "assess if 1H17 can bounce back to the guided range".