Nexi: We Lower Our Fair Value Estimate but Reiterate Our Economic Moat Rating

We reduce our fair value estimate for narrow-moat Nexi to EUR 10.40 per share from EUR 15.80. The European payments provider's guidance for 2024 of mid-single-digit growth was below the mid- to high-single-digit growth we had foreseen for Nexi. Although medium-term guidance points toward acceleration beyond 2024, we have adjusted our growth forecasts downward accordingly. Moreover, we have shortened our stage 2 growth assumptions and increased our weighted average cost of capital, which we believe better reflects the new outlook for Nexi both organically and inorganically within the European payments space. We reiterate our narrow moat rating despite shortening our assumptions on how long Nexi will be able to hold competitors at bay. Nexi's scale as one of the largest payment providers in Europe and, in particular, its strong positioning in the Italian market justifies a narrow moat, in our view. Our Uncertainty Rating is High.