UBS, applying its HOLT valuation framework - which centers on companies' long-term cash-generating capacity - identified sizeable gaps between market-implied growth expectations and sell-side analyst forecasts across a range of payments and fintech stocks.
The firm compared consensus estimates for the coming three years to the growth rates implied by current equity prices over the 2029-2035 timeframe. That comparison highlighted several notable discrepancies between what analysts project in the near term and what investors appear to be pricing into shares for the longer term.
Examples of the disconnect
- Shopify - According to UBS, current share prices imply roughly 10% annual long-term revenue growth. Consensus analyst forecasts, by contrast, call for more than 25% revenue growth over the next three years.
- Toast - UBS states Toast is priced as if it will deliver no long-term revenue growth, while analysts expect high-teens revenue expansion over the next three years.
- Block - On an ex-Bitcoin basis, Block is said to be priced for low single-digit long-term revenue growth. This compares with consensus projections for mid-teens growth across the upcoming three-year window.
- Visa and Mastercard - These two larger networks are less dislocated in UBS's view, with market prices implying about 7% annual revenue growth between 2029 and 2035. That is below consensus forecasts pointing to low-double-digit growth over the next three years.
UBS also flagged several established payments companies where valuation levels imply outright negative long-term revenue trajectories. The bank's HOLT-based analysis suggests Fidelity National Information Services and Global Payments are both priced for roughly 10% annual revenue declines over the 2029-2035 period, while Fiserv appears priced for about a 5% annual decline.
Returns on capital and investor skepticism
The report notes that the broader U.S. payments sector has historically delivered returns on capital well above the U.S. corporate average. Although forecast returns on capital have recovered in recent years, UBS finds that market-implied expectations remain materially lower. The firm interprets that gap as evidence that investors continue to question the durability of the sector's long-term growth profile.
Outlook for lending-focused fintechs
Separately, UBS points to market expectations that imply additional profitability improvement for lending-focused fintech companies. Affirm, Klarna and SoFi are named as companies for which the market is pricing in a path to better returns. UBS projects all three are expected to generate positive cash-flow returns on equity beginning in 2026, with investors pricing in further improvement beyond 2027.
What this means for investors
The HOLT framework comparison performed by UBS highlights a divergence between near-term consensus forecasts and the longer-term assumptions embedded in current market prices for a range of payments and fintech names. For some firms, markets appear to be discounting much more modest long-term revenue performance or even sustained declines, while for certain lending fintechs the market is embedding recovery and profitability improvement.