O’Neil Methodology
Key points:
Key points:
Dean examines global fintech payment processors from both fundamental and technical perspectives. Given the current market volatility, he highlights key support and resistance levels as well as signs that would trigger accumulation. He also discusses the current outlook for the other financial services industry groups.
In this week’s webinar, William O’Neil + Co. Executive Director, Research Analyst Dean Kim examined global fintech payment processors from both fundamental and technical perspectives. Given the current market volatility, he highlighted key support and resistance levels as well as signs that would trigger accumulation. He also discussed the current outlook for the other financial services industry groups.
Key points:
In the last few weeks we have removed four key payment players from our U.S. Focus List: SQ, GPN, FLT, and WP. We also removed Wirecard ( WDIX.DE ), Adyen ( ADYE.NL ), and GMO Payments ( GMOP.JP ) from our Global Focus List.
Despite average revenue growth of 32% y/y and EPS growth of 37% y/y for these removed stocks, they could not hold support at the 200-DMA. We believe there could be further downside from technical deterioration.
We currently still have PYPL, V, MA, WLN.FR, and LIX.BR on our U.S. and Global Focus Lists.
We are bearish on global banks, with the U.S. yield curve nearing inversion and possible headwinds as system-wide NIM could contract. We only have SIVB in our U.S. Focus List in the banks sector.
Indian financials, once the bright spot in Asia, has entered a down cycle. India is also showing yield curve flatness and may invert soon given a weak currency and rising oil prices. We had seven financial stocks on our Focus List but are down to only HDFC Bank ( HFC.IN ).
In Europe, we have only Nor Finans Holding ( NOFI.NO ) on our Focus List and, in Latin America, we have only Banco Del Bajio ( BJI.MX ).
We highlight three banks with the largest market cap in each of the U.S., Europe, and Asia to show where support levels may be given the current weakness in banks across the globe.
Key Points:
Fundamental ratings: EPS Rank 63. Composite Rating 94. SMR Rating B.
Consensus expects EPS to grow 60% and 15% in FY 2019 and FY 2020, respectively.
Technical ratings: RS Rating 96. A/D Rating B.
Institutional sponsorship has steadily increased for the past 17 quarters (i.e. from the time of its IPO).
Key points:
Fundamental ratings: EPS Rank 98. Composite Rating 99. SMR Rating A.
Consensus expects EPS to grow 41% and 34% in FY 2019 and FY 2020, respectively.
Technical ratings: RS Rating 95. A/D Rating B.
Institutional sponsorship increased 24% y/y to 256 funds in June 2018.
While U.S. economic fundamentals look benign, there is a major cloud on the horizon that cannot be ignored: the flattening yield curve that may invert to negative sometime late this year or early next year. History tells us that the financial sector may be poised for major underperformance.
