Overview

Baird Equity Research analyst David J. Koning issued a July 14 2026 research note identifying three financial‑technology stocks—CPAY, XYZ and Mastercard (ticker MA)—as the firm’s top ideas heading into the second‑quarter 2026 earnings season. The note expects each to deliver a beat‑and‑raise outcome, citing solid fundamentals, organic revenue growth exceeding 10 % and earnings‑per‑share (EPS) growth of roughly 15 % or higher, while valuations appear reasonable given these growth profiles.

Sector backdrop

The U.S. payments environment is described as strong, with large banks reporting accelerating credit‑card and debit‑card volume growth. Rising interest rates are viewed as beneficial: XYZ and MA hold a mix of fixed‑rate debt and floating‑rate cash, whereas CPAY’s corporate‑payments franchise benefits from higher rates on its float portfolio.

CPAY

Baird projects a second‑quarter beat‑and‑raise scenario for CPAY, estimating that Street EPS forecasts are biased upward by about 1 %. The firm expects Q2 revenue growth to stay above 10 % organic on a constant‑macro basis and EPS growth to exceed 25 %. Corporate payments, which represent roughly 40 % of total revenue, are expected to grow around 15 % in the quarter, with acceleration likely in the second half of the year. Share‑repurchase activity is highlighted: 2.4 million shares were bought back in Q1 and an additional 0.7 million in early Q2, which could further reduce share count and lift EPS. CPAY’s predecessor Corpay reported first‑quarter 2026 earnings and revenue that beat analyst expectations and announced a $1.3 billion increase to its credit facilities. The company also entered a partnership with BVNK to offer stablecoin settlement capabilities to its customers.

XYZ

For XYZ, Baird anticipates EPS estimates to be biased upward by 2‑4 % and expects a beat‑and‑raise outcome. Square’s gross profit, accounting for about 35 % of total profit, is projected to accelerate to 11 % growth from 9 % in Q1. CashApp’s gross profit, roughly 65 % of total, is expected to beat Street estimates by about 5 % and deliver 33 % year‑over‑year growth. Adjusted EBIT margin is likely to exceed expectations due to solid incremental margins and a decline in stock‑based compensation. Recent developments include Block’s Square unit being chosen by Sherwin‑Williams as a payment‑solutions partner and the launch of integrations with ChatGPT and Claude for sellers. Following these updates, Baird raised its price target on XYZ to $100.

Mastercard (MA)

Baird expects a solid beat‑and‑raise performance from Mastercard. U.S. transaction volumes accelerated across major banks in the quarter, and Baird believes Street estimates for Q2 are conservative regarding cross‑border revenue and operating margins based on historical sequential patterns. Mastercard is reportedly considering the sale of a majority stake in its UK payments subsidiary Vocalink. Baird raised its price target on MA to $680, citing expectations of a revenue beat.

Disclosure

The article was generated with AI assistance and reviewed by an editor.