The financial technology sector’s secular growth story remains “as strong as ever,” but Piper Jaffray analysts are turning incrementally less bullish on the group.
What To Know
Digital payments and the digitization of business ecosystems are showing a continued surge, Piper Jaffray’s Jason Deleeuw said during a Thursday interview on “Bloomberg Technology.”
Yet a look at the macro cyclical outlook makes it evident that the environment is no longer as positive today as it was in the past for the following reasons, Deleeuw said:
- An overall weakness in stocks.
- Federal Reserve interest rate hikes and balance sheet reductions.
- Lapping of the tax cuts.
“We have already seen an acceleration in the last couple of years and we just feel like now we are probably going to be decelerating,” the analyst said.
Why It’s Important
The consumer remains a “bright spot” in the economy today and there is no reason to believe that will change, Deleeuw told Bloomberg. But at the same time, the fintech sector is likely to “give back” some of its accelerated growth, he said.
A more cautious stance on the fintech group for 2019 is warranted given expectations for a slowdown in retail sales, the Piper Jaffray analyst said. This will by default translate to slower volume growth for the fintech players, which is linked to the secular shift of cash and checks being displaced by electric payments, he said.