Worldpay (WPG) shares are having their cards declined again this morning, the in payments processing giant’s shares down sharply for a second successive day, echoing the global equity market rout. However, while global markets are jittery about the banking sector and its ability to weather slower growth and recession, negative interest rates, market turbulence, a commodity depression and risk of bad debts from the latter, we believe the correction in WPG shares is overdone. In fact back close to IPO debut levels they could represent a real recovery bargain from this knee-jerk reaction. At 266p/-3.6% the shares have already bounced strongly from lows of 250p/-9.4%, suggesting we are not alone in our thinking.

WPG allows retailers to accept >300 payments methods including newly launched Apple Pay almost anywhere in the world, and in almost any currency, and it processes over >30m mobile online and instore transactions daily – a figure which can only but grow as we are encouraged to ditch cash (€500 could be ditched to counter crime). With digital payment offering reduced chance of both fraud and of lost sales, it appeals to both sides of the till (for as long as they exist) and online, while its wealth of valuable data allowing analysis of spending habits is another string to its bow.

Given the economic transition to consumption from export-led in China, and an increasing move to a global service and cash-less economy, the outlook for WPG remains favourable with positive fundamentals and strong growth drivers endorsed by partnerships with both Mastercard and Visa. Furthermore the current environment of low interest rates and faith in accommodative central bank policy should maintain consumer confidence a good while longer.

Mike van Dulken, Head of Research