Credit Suisse upgrades Worldpay, highlights structural growth

The bank admitted that Worldpay’s full year results were “not perfect”, but highlighted four reasons why it was turning more positive.

CS said the recent Money 20/20 industry conference supported its view that growth prospects for the industry remain robust.

“Furthermore, growing industry complexity means that existing market leaders are well positioned to continue taking share. We think this adds credibility to management's target to grow revenues at 9-11%.”

It said concerns over the US were too extreme, while investor worries over industry commoditisation are over-played.

“We have taken a number of calls from investors concerned about commoditisation across the industry. We think this is wrong. The clear message from Money 20/20 is that the industry is well set for sustained growth. Yes, simple processing for large retailers will come under pricing pressure.

“However, value added services will give payments companies a significant runway to resist price pressure.”

Finally, the bank said capex had scope to reduce, supporting management ambitions to improve free cash flow in full year 2017.

Credit Suisse maintained its 300p price target on Worldpay, saying the stock was its preferred way to play the attractive payments space.

At 1252 BST, Worldpay shares were up 1.1% to 272p.