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Investing.com — Shares in Adyen NV (AS:ADYEN) climbed after New Street Research initiated its coverage of the Dutch payments firm with a “Buy” rating.
In a note to clients, the analysts argued that the firm is set to grow despite posting a first-half profit miss that stemmed from an unexpected acceleration in hiring. They added that this move runs counter to Adyen’s rivals, including American-Irish financial services company Stripe, which have pulled back on spending and reduced headcount.
“Margin expectations have now been reset and Adyen is well positioned to build long-term value creation versus those slowing investment,” the analysts said.
The group’s U.S. unit – traditionally a laggard behind its European division – is also expected to expand, according to the New Street analysts, particularly due to the potential of its so-called “embedded finance” business, which offers payment options to customers that are integrated into common digital platforms.
“Growth at Adyen in the near-term is based on the underlying Payments business but, as we look to the end of this (undefined) guidance period, expectations are that Embedded Finance will help sustain this growth,” the analysts said.
A report from consultancy McKinsey estimates that, on an industry-wide basis, embedded finance reached $20 billion in revenues in the U.S. alone in 2021.
