ADYEN - Bringing some upside back on the table ADYEN NA
In December we had reaffirmed our Reduce rating on Adyen in our note “Prudence warranted from sector trends headwinds”. However, given the 25% decline of the stock in the past 4 weeks or 33% since our note, we see some breathing room at the current level. Our investment case remains largely unchanged compared to December. Though at a TP of €2,250 we see enough upside to warrant a Buy recommendation, despite some likely short term headwinds.• Adyen remains an expensive name in the sector, however the strong overperformance vs peers we saw in December has diminished. Shorter term performance is identical with Paypal (following the strong dip after 4Q results), with medium term performance more in line with Nexi.
• The weak outlook that Paypal reported on Tuesday doesn’t translate in a direct readthrough for Adyen. Adyen is on the other end of Paypal’s loss of the eBay contract and drop-off in consumer spending due to the end of government stimulus, is especially pronounced at Paypal due to Venmo playing an important role in the stimulus check distribution.
• We believe 4Q21 is going to be more benign than Paypal’s results, though headwinds are still very much a reality. Reopening of stores through 2H21 will impact the still predominantly e-commerce focussed Adyen. And the Omicron variant has delayed the recovery of international travel, hitting Adyen harder than peers given it’s higher concentration in airline merchants.
• Taking into account specific headwinds for Adyen and the overall pressure on high growth technology stocks, we remain conservative with a €2,250 TP, trailing consensus TP by €460. Despite some short term negativity this still leaves plenty of upside on the table to upgrade to Buy.
Adyen NV, formerly Adyen BV, is provider of mobile, online and point-of-sale (POS) payment solutions based in the Netherlands. It operates an online platform enabling merchants to accept payments internationally and from all sales channels, such as online shops, mobile payments from applications and Websites, and POS, such as countertops, mobile terminals, tablets and cash registers, among others. The platform covers the entire payment chain, including technical, contractual, reconciliation and settlement processes. The platform is available in the form of ready-to-use payment pages (HPP), application programming interface (API), and client-side encryption solution (EE). The Company's customers include Mango, KLM, Netflix, Superdry, Uber, Groupon and Crocs, among others. It has offices in the Netherlands, the United Kingdom, France, Germany, Belgium, Brazil, China, Australia, Mexico, Singapore, Spain, Sweden and the United States.
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