Financial-technology stocks have been battered in recent years — and now may be worth a fresh look.

The Global X FinTech ETF FINX has fallen 48% over the past five years, while the S&P 500 SPX has risen 80% and the S&P 500 financials sector XX:SP500.40 has increased 59%. Analysts now see plenty of opportunity in the fintech sector, particularly as valuations have come down for some high-profile names.

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Recent actions in the payment-technology industry suggest that major players are getting more serious about improving operating performance. Block XYZ, the parent of Square and Cash App, said this week that it would slash more than 40% of its workforce in a bid to drive operational efficiencies and reduce organizational friction. Management said that artificial-intelligence tools are driving major productivity benefits that will enable the company to do more with less.

See more: Block says AI will allow it to cut more than 4,000 jobs. Some argue that’s not the whole story.

Block CFO Amrita Ahuja told MarketWatch that the move came from a “position of strength,” as the company simultaneously announced fourth-quarter results that exceeded the consensus view. But the reality is that Block shares have plunged 77% from their 2021 peak, as pricey acquisitions have failed to yield commensurate financial benefits and as fintech valuations have receded from pandemic-era levels.

In turn, the stock’s valuation is now more compelling. As of Friday’s close, Block was trading at 17.4-times estimated earnings per share over the next 12 months, according to LSEG data. That valuation compares with a three-year average price-to-earnings multiple of 24.2 for its stock. Block is heavily favored by analysts working for brokerage and research firms polled by LSEG, as you can see below.

Then there’s PayPal Holdings PYPL, which in early February announced that Enrique Lores, formerly of HP HPQ, would be taking over as CEO after prior turnaround attempts failed to manifest quickly enough. Critics have noted that PayPal underinvested in its core business, ceded its first-mover advantages to Apple Pay AAPL and moved too slowly with its push to monetize Venmo.

Some analysts are now intrigued by the possibility of a breakup or outright sale of the company. Lores doesn’t exactly have a payments-sector background, but PayPal called him the “lead architect” of the 2015 split of HP and Hewlett Packard Enterprise HPE. And Bloomberg News reported earlier this week that multiple entities have expressed early interest in buying either parts of the company or all of it. PayPal declined to comment on those talks.

See also: PayPal’s stock pops on takeover hopes. Here’s who could swoop in with a purchase.

Off 85% from their 2021 peak, PayPal shares sport a potentially compelling forward P/E valuation of 8.6, compared with a three-year average valuation of 12.4.

Then again, Wall Street analysts aren’t enthusiastic about PayPal, even at the current low P/E level: Only 10 out of 45 analysts polled by LSEG who cover the company rate the stock a buy or the equivalent.

See more: Could Stripe ‘salvage’ PayPal? What Wall Street has to say about the latest takeover talk.

For more perspective on the valuations, the S&P 500 trades at a forward P/E of 21.6, while its financial sector trades at a forward P/E of 15.3. Payment-processing stalwarts Visa V and Mastercard MA, which have competitive moats and enviable profit margins, trade at respective P/E valuations of 23.6 and 25.7. Those are well below the three-year average forward P/Es of 27.6 for Visa and 31 for Mastercard.

Investors have been worried about a laundry list of issues, including regulatory changes, economic prospects and whether there’s simply much more room to convert cash-based payments over to cards. The stocks even got hit in the wake of Citrini Research’s viral blog post floating a futuristic scenario in which AI-fueled stablecoins disrupt established payment networks and AI-driven productivity boosts force mass underemployment, leaving knowledge workers with less money to spend.

“The sad truth in this market is also that if you have to say ‘xyz is not an AI loser but a winner,’ then you have already lost (at least the debate),” Bernstein analyst Harshita Rawat wrote in a note to clients earlier this week. But she also noted that Mastercard and Visa have “two-sided networks across billions of consumers and hundreds of millions of merchants” that confer major incumbency advantages.

See more: How to play payments stocks after essentially their worst run in 15 years

MarketWatch conducted a broader screen of fintech stocks to assess which are most favored by analysts. We narrowed our universe to the 41 U.S. companies in the Global X FinTech ETF that are expected to generate positive 12-month earnings per share and that are covered by at least five analysts. That left us with 34 companies, and we also added Visa and Mastercard.

Among those, 18 are rated a buy or the equivalent by at least two-thirds of the analysts covering them, according to LSEG data. Here’s the full list, sorted by ascending forward P/E:

Company

Forward P/E

Feb. 27 price

Consensus price target

Implied 12-month upside potential

2026 price change

LendingTree Inc. TREE

7.3

$37.37

$81.33

118%

-30%

LendingClub Corp. LC

8.1

$14.91

$24.01

61%

-21%

SS&C Technologies Holdings Inc. SSNC

10.8

$75.29

$100.92

34%

-14%

Mitek Systems Inc. MITK

12.1

$14.58

$15.00

3%

38%

ACI Worldwide Inc. ACIW

13.1

$39.68

$62.65

58%

-17%

Sezzle Inc. SEZL

14.9

$72.95

$97.00

33%

15%

Intuit Inc. INTU

16.0

$409.03

$630.51

54%

-38%

Payoneer Global Inc. PAYO

16.3

$4.32

$8.19

90%

-23%

HealthEquity Inc. HQY

16.5

$76.49

$116.94

53%

-17%

Block Inc. XYZ

17.4

$63.70

$83.88

32%

-2%

i3 Verticals Inc. IIIV

19.0

$22.38

$31.33

40%

-11%

Jack Henry & Associates Inc. JKHY

23.2

$162.46

$203.58

25%

-11%

Visa Inc. V

23.6

$320.14

$400.90

25%

-9%

Blend Labs Inc. BLND

23.9

$1.68

$4.21

151%

-45%

Mastercard Inc. MA

25.7

$517.21

$661.68

28%

-9%

Paymentus Holdings Inc. PAY

29.3

$24.47

$33.32

36%

-23%

Affirm Holdings Inc. AFRM

30.6

$46.98

$85.06

81%

-37%

Guidewire Software Inc. GWRE

41.5

$145.32

$249.79

72%

-28%

Source: FactSet

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