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Shares in in payments processing giant Worldpay (WPG) are topping the UK 100 this morning, benefiting from a revival of interest into April/Q2. This follows a tough March during which investors sent shares back near to February lows. While FY 2015 results were on all accounts decent (revenues +14%, profits +34%, free cash flow positive) markets were uninspired by what management described an ‘in-line’ start to 2016 and thus less bullish than shareholders had been hoping for.
Jitters persist about the banking sector’s ability to weather slower growth and negative interest rates, something which could impact WPG profitability in terms of what it is charged to process payments. The global growth picture also remains muddy which concerns those focused on consumer confidence and growth in spending. However, with central banks are set to remain accommodate for a good while longer to keep the economic recovery ball in the air. The fundamentals for the company are also pretty solid as we move toward a cashless society.
The shares finding support around their 274p 200-day moving average, keeping them above their October IPO price of 250p, bodes well in the short term. The only hurdle that remains is that nasty 2016 trend of falling highs resistance around 290p.
Mike van Dulken, Head of Research, 4 April
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