Stephens’ analyst Charles Nabhan remained cautious on the “payments” space at large on Wednesday, but said there still are a few stocks worth owning in this sector at present.

Nabhan sees a 35% upside in Block Inc

One of the names he likes in the payments space is Block Inc (NYSE: SQ). He initiated the stock at “overweight” this morning with a price target of $170 that represents a 35% upside from here.

Payment digitization, as per Nabhan, is a strong secular tailwind for the American company formerly known as Square Inc. In his note, the analyst said:

We view execution against a substantial TAM across Cash App & Seller serves as a catalyst for multiple expansion. SQ’s 2-sided network is a differentiator in the highly competitive FinTech and SMB space, and Afterpay is a driver of synergies and connector between the 2 eco-systems.

Global Payments initiated at ‘overweight’

Another one he recommends in this sector is Global Payments Inc (NYSE: GPN) that topped Wall Street estimates for profit and revenue in its latest reported quarter. Charles Nabhan wrote:

Tech-enabled strategy (eCommerce, owned-software) plus exposure to high-growth channels (hospitality, B2B) drive share gains, and 700 bps+ outperformance relative to network credit volume growth further solidifying outlook.

He assumed coverage of the stock with an “overweight” rating on Wednesday. The Stephens’ analyst says GPN could climb to $170 a share; a 25% increase in the stock price from here.

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