Financial technology stock Worldpay (WP) might be added to the S&P 500 index, a positive development that could open the door to more institutional buying, an analyst says. Worldpay stock gained on Friday.
Jefferies analyst Michael Del Grosso, in a report Friday citing a Bloomberg article, said Worldpay could be added to the S&P 500 index.
“Bloomberg has reported that Fifth Third exited its remaining Worldpay (stake) via intraday trading on March 14,” Del Grosso wrote. “The news reports also suggest the potential motivation for the sale is to position Worldpay for S&P 500 inclusion, which makes sense, in our view, as S&P is no longer admitting new companies to the index that have a dual-class share structure.”
Fintech stock Worldpay has been trading near an entry point of 98.06. Worldpay stock rose 0.6% to 98.10 on the stock market today. Worldpay has formed a cup-with-handle chart pattern, often a positive sign.
Learn more about the IBD fintech group, ranked a decent 43 from the top of 197 industry groups, at IBD Stock Checkup.
Worldpay, a merchant acquirer, is one fintech stock to watch.
Vantiv, Worldpay Merged In 2017
In one of the biggest recent mergers, fintech stock Vantiv in 2017 bought Worldpay for $10.4 billion. The merged company kept the name Worldpay. Fifth Third Bancorp (FITB) spun off Vantiv in 2012.
Merchant acquirers serve as middlemen between banks and retailers. Merchant acquirers have contracts with retailers to handle the processing of credit cards and other transactions.
“Our initial analysis suggests that the historical benefit from index inclusion — which we acknowledge is not a certainty and carries an unknown timeline — could produce short-term outperformance in the low single digits from the time of the announcement through the effective date,” Del Grosso added.
Follow Reinhardt Krause on Twitter @reinhardtk_tech.
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