Clear Street Initiates Payments Coverage, Favors Visa and Mastercard Over Block and PayPal

Clear Street launched its coverage of the payments industry on Thursday, favoring established card networks Visa and Mastercard with Buy ratings while taking a more cautious Hold stance on fintech firms Block and PayPal.

Bullish on Card Networks

Analyst Owen Lau of Clear Street designated Visa as "one of the highest-quality compounders" in the firm's coverage, setting a $403 price target. The firm's note highlighted Visa's robust financials, including adjusted operating margins exceeding 67% and its ability to convert roughly half of its net revenue into free cash flow. Lau suggested that a recent dip in valuation due to concerns over AI and macro factors presents "an attractive entry point."

Mastercard also received a Buy rating with a $617 price target. Clear Street argued that the stock, which has underperformed the S&P 500 year-to-date, "hasn't received enough credit for its healthy network, robust growth in VAS [value-added services], and optionality in agentic commerce." Both price targets are based on a 27x price-to-earnings multiple applied to the firm's fiscal 2027 earnings per share estimates.

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A 'Wait-and-See' Approach to Fintechs

In contrast, Clear Street initiated coverage on Block with a Hold rating and an $82 price target. While acknowledging the company's improving fundamentals, the firm stated a preference to "wait for a better entry point" as Block pivots toward what it calls an AI-orchestrated commerce platform.

PayPal was also started at Hold with a $61 price target. According to Clear Street's analysis, a significant positive inflection in the company's story is more likely in 2027-2028 than in 2026. However, the note identified a reported $53 billion buyout offer from Stripe and Advent as a key potential near-term catalyst for PayPal's stock.