Decent First Quarter for Nexi; Fair Value Estimate Maintained

We maintain our fair value estimate of EUR 13.60 per share for Nexi after the payment services provider posted a decent first-quarter 2021. Revenue increased 4% to EUR 259 million despite a third wave of the coronavirus and tightened restrictions have postponed a strong recovery in card payment activity. Tourist travel to Italy has not returned meaningfully yet, keeping international card spending low. Relative to pre-COVID-19 levels of 2019, payment activity via international card schemes was 70% to 80% lower in the quarter. Nexi earns a higher margin on such transactions versus the local card scheme. Revenue in Nexi’s largest segment merchant services and solutions remained flat versus the same period last year, which is good considering the first quarter last year was only partially affected by COVID-19. Cards and digital payments’ revenue was up 7% on strong growth in the card stock of international debit. As expected, costs increased versus last year (up 7%). First, in 2020 the group operated a cost-containment plan to counteract the COVID-19 impact. But the group also saw higher personnel costs as well as some project-related costs. We don’t expect the latter to be recurring. In sum, and owed to its operating leverage, the EBITDA margin declined only marginally to 54% from 55% a year ago.