Nexi rears its head again, Morgan Stanley promotes the stock

(Il Sole 24 Ore Radiocor) - Nexi is trying to regain ground at Piazza Affari: the payments company's shares gained 3.84% to EUR 2.89, bucking the trend of a sharply declining list. The shares, which on Thursday had posted a heavy decline after the Capital Markets Day, benefited from Morgan Stanley's analysts' verdict, who raised their recommendation on the shares to equal-weight from underweight, while downgrading the target price to EUR 3 from EUR 3.85.

Experts welcomed management's shift from an equity story based on high growth prospects (previously judged unrealistic) to a 'much more defensive approach to growth that prioritises cash generation', thus leaving room for debt reduction and 'predictable returns through dividends'. Now that the company is 'focusing on low single-digit growth and limited margin expansion over the next few years', Morgan Stanley writes, 'we see a more achievable set of targets' and consequently 'less room for near-term downgrades'.

Multiples, therefore, "could stabilise in the coming months, in particular" getting support from "dividends and cash generation". While the US investment bank therefore remains 'prudent on the long-term growth story' (Nexi's management sees a return to 'mid-single digit' growth after 2028), it currently sees 'a more balanced risk/reward ratio', which merits promotion to 'equal-weight'. Nexi, meanwhile, announced that the Zippay mobile payments service will be available in Ireland from 10 March, where it will be made available by Aib, Bank of Ireland and Ptsb, which will gradually 'activate it within their mobile banking apps for a potential pool of over 5 million customers'.