Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>This is our first report on Fiserv, a major global provider of fintech solutions related to payments, account processing, e-commerce, digital banking solutions, card issuer processing, and cloud-based Point-of-Sale solutions.</li><li>The company delivered a strong quarterly result, surpassing Wall Street expectations on all counts with a strong organic revenue growth.</li><li>The global active merchants' accounts of the company grew.</li></ul>

This is our first report on Fiserv, a major global provider of fintech solutions related to payments, account processing, e-commerce, digital banking solutions, card issuer processing, and cloud-based Point-of-Sale solutions.The company delivered a strong quarterly result, surpassing Wall Street expectations on all counts with a strong organic revenue growth.The global active merchants' accounts of the company grew.

Fiserv Inc: Initiation of Coverage – Portfolio Expansion & Other Key Drivers

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>In response to an <a href="https://www.afr.com/street-talk/bain-capital-checks-out-eml-payments-bankers-chase-other-buyers-20220412-p5acvc" target="_blank" rel="noopener">AFR article</a>, <a href="https://www.smartkarma.com/entities/eml-payments-limited" target="_blank" data-smartkarma-citation="entities:3232:1" rel="noopener">EML Payments Limited (EML AU)</a> confirmed takeover interest from Bain Capital. However, discussions have ceased. The shares closed 10.5% higher at A$2.94. </li>
<li>The bombed-out share prices of payment companies have supported recent M&amp;A activity such as <a href="https://www.smartkarma.com/entities/afterpay-holdings-ltd" target="_blank" data-smartkarma-citation="entities:24047:1" rel="noopener">Afterpay Holdings (AFY AU)</a>/<a href="https://www.smartkarma.com/entities/square-inc" target="_blank" data-smartkarma-citation="entities:23755:1" rel="noopener">Square Inc (SQ US)</a> and <a href="https://www.smartkarma.com/entities/sezzle-inc" target="_blank" data-smartkarma-citation="entities:30969:1" rel="noopener">Sezzle Inc (SZL AU)</a>/<a href="https://www.smartkarma.com/entities/zip-co-ltd-3708706d-4978-4e29-acbc-d9702b971da9" target="_blank" data-smartkarma-citation="entities:29126:1" rel="noopener">Zip Co Ltd (Z1P AU)</a>.</li>
<li>Despite today’s pop, the shares are still 50% down over the last 12 months. EML’s market positioning and expected stronger 2HFY22 should continue to fuel takeover interest.</li>
</ul>


In response to an AFR article, EML Payments Limited (EML AU) confirmed takeover interest from Bain Capital. However, discussions have ceased. The shares closed 10.5% higher at A$2.94. 
The bombed-out share prices of payment companies have supported recent M&amp;A activity such as Afterpay Holdings (AFY AU)/Square Inc (SQ US) and Sezzle Inc (SZL AU)/Zip Co Ltd (Z1P AU).
Despite today’s pop, the shares are still 50% down over the last 12 months. EML’s market positioning and expected stronger 2HFY22 should continue to fuel takeover interest.


EML Payments Flirtation with Bain Likely Not the Last

Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>Well-established digital payment platforms, such as Visa, are enjoying renewed interest from long-term investors.</li>
<li>In spite of certain narratives, rotation to value stocks has little to do with Visa's recent outperformance.</li>
<li>The impact of short-term headwinds will likely remain muted due to Visa's increased penetration in certain markets and new flow channels.</li>
</ul>


Well-established digital payment platforms, such as Visa, are enjoying renewed interest from long-term investors.
In spite of certain narratives, rotation to value stocks has little to do with Visa's recent outperformance.
The impact of short-term headwinds will likely remain muted due to Visa's increased penetration in certain markets and new flow channels.


<ul>
<li>Fiserv is valued as a slow-growth and low return on capital legacy business, although this does not appear to be the case.</li>
<li>At present, the expected topline growth rate is far from spectacular, but parts of the business are growing fast and could result in a multiple repricing.</li>
<li>Due to the acquisition of First Data, the company's improving profitability is a better measure of business performance than return on capital is.</li>
</ul>


Fiserv is valued as a slow-growth and low return on capital legacy business, although this does not appear to be the case.
At present, the expected topline growth rate is far from spectacular, but parts of the business are growing fast and could result in a multiple repricing.
Due to the acquisition of First Data, the company's improving profitability is a better measure of business performance than return on capital is.


Fiserv - Investing In Transforming Leaders Rather Than Disruptors

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p><a href="https://www.smartkarma.com/entities/toast-inc" target="_blank" data-smartkarma-citation="entities:34261:1" rel="noopener">Toast (TOST US)</a> increased its IPO price range to<a href="https://finance.yahoo.com/news/restaurant-software-provider-toast-raises-144113955.html" target="_blank" rel="noopener"> $34 to $36</a> per share on 20 September, up from $30 to $33 per share previously. The company plans to offer 21.74 million class A shares through its IPO. At the high end of the revised up IPO price ($36 per share), Toast Inc would raise $783 million.</p><div class="content-highlight">
<p>Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the IPO price range (US$36). Given the decent upside, we have a POSITIVE view of this IPO. </p>
<p>Our valuation of Toast Inc is based on an EV/S multiple of 10.1x using our estimated sales of $2.4 billion in 2022. The EV/S multiple of 10.1x is based on a 10% discount to the average multiple of the comps in 2022.</p>
</div>

Toast (TOST US) increased its IPO price range to $34 to $36 per share on 20 September, up from $30 to $33 per share previously. The company plans to offer 21.74 million class A shares through its IPO. At the high end of the revised up IPO price ($36 per share), Toast Inc would raise $783 million.
Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the IPO price range (US$36). Given the decent upside, we have a POSITIVE view of this IPO. 
Our valuation of Toast Inc is based on an EV/S multiple of 10.1x using our estimated sales of $2.4 billion in 2022. The EV/S multiple of 10.1x is based on a 10% discount to the average multiple of the comps in 2022.


United States

Fiserv, Inc. provides fintech solutions. The Company provides a platform that enables businesses to accept payments, track performance, and drive sales. Fiserv serves corporate and public sector, merchants, banks, credit unions, and other financial institutions globally.

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Fiserv (FI US)

Fiserv Inc: Initiation of Coverage – Portfolio Expansion & Other Key Drivers

This is our first report on Fiserv, a major global provider of fintech solutions related to payments, account processing, e-commerce, digital...

Baptista Research

EML Payments Flirtation with Bain Likely Not the Last

EML confirmed takeover interest from Bain Capital but discussions have ceased. EML’s market positioning and expected stronger 2HFY22 should...

Arun George

Visa: Don't Mind The Disruptors

Well-established digital payment platforms, such as Visa, are enjoying renewed interest from long-term investors. In spite of certain narratives,...

Vladimir Dimitrov, CFA

Fiserv - Investing In Transforming Leaders Rather Than Disruptors

Fiserv is valued as a slow-growth and low return on capital legacy business, although this does not appear to be the case. At present, the...

Vladimir Dimitrov, CFA

Toast Inc Valuation Analysis

Our base case valuation of Toast Inc is implied market cap of US$24.9 billion or US$45.5 per share, which is 26% higher than the high end of the...

Douglas Kim

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