Bernstein has named Adyen, Affirm, Visa, Mastercard and Block as its preferred stocks in the payments sector, maintaining Outperform ratings on all five companies in a research note published on November 12. The brokerage pointed to improving profitability, fair valuations and rising demand for digital payments as the core reasons behind its stance. The list also spans distinct corners of the payments industry — card networks, a merchant payments platform, a buy now, pay later lender and a fintech app parent — giving a side-by-side view of how one firm values different business models across the sector.

The note also laid out specific earnings multiples for Adyen, Affirm and Block, according to Investing.com. Analysts were particularly constructive on Adyen and Affirm, and Bernstein added that strong free cash flow across the group could support share buybacks and shareholder returns.

Alongside the picks, Bernstein downgraded Toast, the restaurant software company, to Market-Perform from Outperform and cut its price target from $45 to $38, according to MarketBeat. The firm said it now takes a more cautious view of Toast's valuation and growth trajectory. Toast also appears elsewhere in the note as one of Adyen's recent customer wins, a sign of how closely linked the sector's players are.

How Bernstein Values Its Top Picks

Adyen currently trades at roughly 19 times estimated 2027 earnings, with cash holdings equal to about 16% of its market value, a level Bernstein describes as attractive relative to the growth it expects. Because the multiple is anchored to 2027 estimates, the valuation case rests on a multi-year horizon rather than near-term results. The firm projects the payments company's revenue to expand about 21% in 2027, citing large customer relationships, an expanding range of payment services and the possibility of share buybacks.

Recent customer wins for Adyen include OpenAI, Shopify and Toast. Bernstein also flagged demand for the company's Orb billing platform and its Talon.One customer engagement technology. In its latest third-quarter business update, Adyen reported net revenue up 23% to €738.1 million, with processed payment volumes rising 30% to €451.1 billion — figures from the company's most recently reported quarter.

Affirm Holdings, Inc. (AFRM) trades at about 18 times projected 2027 adjusted operating income. Bernstein views that multiple as attractive as the buy now, pay later lender extends its reach beyond online retail, with partnerships with Amazon, Shopify and Costco expected to add to transaction volumes.

Block, the parent company of Square and Cash App, trades at around 16 times estimated 2027 non-GAAP earnings. Bernstein cited improving Square payment volumes and strengthening Cash App profitability in assigning the company an Outperform rating.

Visa and Mastercard also retained Outperform ratings. Bernstein highlighted their global payment networks and steady earnings growth, noting that both companies are expanding into cybersecurity, fraud prevention and other services — a shift that broadens revenue beyond core network processing. The firm considers the two networks attractive longer-term investments.

Risks Bernstein Flagged

The research note was not without caution. Bernstein said elevated investment spending could weigh on Adyen's margins for a period, though the firm did not change its positive view of the company.

Affirm remains exposed to consumer spending trends, borrowing costs and credit losses, and a weaker economy could challenge earnings expectations. Bernstein nonetheless highlighted the lender's growing network effects as more merchants and shoppers adopt the service.

Block did not make Bernstein's top three picks. Analysts raised concerns about growth in the number of customers using Cash App as their primary bank and pointed to limited detail on the company's lending operations.

For Visa and Mastercard, Bernstein said much of the recent improvement in valuations has already occurred, which could limit near-term upside. The firm also identified AI shopping agents and payment tokenization as possible new revenue sources for the networks.

The downgrade of Toast reflects concerns about competition and the cost of sustaining growth. Bernstein also questioned whether expectations for AI-driven improvements are already reflected in the share price, and its price target on the company now stands at $38.

Source: CoinCentral