Exane ups Worldpay to 'outperform' after de-rating

(ShareCast News) - Exane BNP Paribas upgraded payments processor Worldpay to 'outperform' from 'neutral' and lifted the price target to 340p from 290p, saying last year's de-rating provides a better entry point.The bank said it is still cautious on Worldpay's ecommerce margins and capex but factors in faster sales growth.It has upped its earnings before interest, taxes, depreciation and amortisation forecasts for the US division, which it said now has the right assets to compete in the small to mid-sized business space. Exane now expects EBITDA margin of 24.8% in 2017 and 26.7% in 2018, versus 24% and 26%, previously.Exane said the US division's recent woes are neither structural nor related to its smaller case."We show that profitability in merchant acquiring in the US is more a function of a company's merchant mix (SMBs matter), channel-to-market, and platform consolidation. WPUS appears to have addressed all those issues and we now expect margins to recover from H2."The bank also pointed out that small retail in the UK continued to do well in the second half of last year, performing better than the first half. This should support WPUK's net revenue growth and to some extent, offset the waning boost from Interchange regulation in the second half of 2016.At 1040 GMT, Worldpay shares were up 2.6% to 285.20p.