This article first appeared on GuruFocus.

JPMorgan is telling investors to step back from two familiar names in payments in 2026, downgrading Fiserv (NASDAQ:FISV) and PayPal (NASDAQ:PYPL) to Neutral while leaning into Toast (NYSE:TOST).

The bank did not sugarcoat it, saying payments stocks are on track for their worst year in 15 years outside the COVID crash. Growth has slowed, competition is fierce, and newer bets like lending have yet to prove they can pay off. JPMorgan called 2026 a prove-it year for both companies, warning that while a lot could go right, the risk of disappointment is just as high.

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Toast, on the other hand, looks ready for a better run. Its shares are down 6% YTD even as earnings estimates climbed 27%, a gap JPMorgan sees as an opportunity. The bank also pointed to Toast's Rule of 54%, or 59% using a 38% incremental margin, as a sign its growth and profitability are starting to line up.

JPMorgan is steering investors away from uncertainty and toward clearer execution stories. The next test comes in early 2026, when results will decide if payments names earn their way back into favor.