Nexi can play catch-up with rival Worldline

The logo of Italian payments group Nexi is pictured inside their headquarters in Milan, Italy, March 28, 2019. REUTERS/Alessandro Garofalo

MILAN, Sept 27 (Reuters Breakingviews) - It’s time for Nexi (NEXII.MI) to close a valuation gap with rival Worldline (WLN.PA). The 11.5 billion euro Italian payments group pledged on Tuesday to boost revenue by 9% per year by 2025 and its EBITDA by 14%. Such targets are in line with the growth ambitions of its 12.2 billion euro French peer unveiled at a capital markets day last year. Nexi’s Chief Executive Paolo Bertoluzzo is also promising 2.8 billion euros of excess cash for acquisitions, debt repayments or share buybacks. Worldline’s Gilles Grapinet, who competes with Nexi to snap up European payments assets, had earmarked just 0.8 billion euros of free cash flow in its four-year plan.

Despite similar growth targets, Nexi is valued less richly than Worldline. Taking into account a 9% share rise on Tuesday, the Milanese company trades at 14.6 times 2023 earnings, a 12% discount to its French peer’s multiple. Such a gap does not seem justified. Of course, investors may be wary of going big on Italian companies until Rome’s next government clarifies its plans. Still, investors should be giving Nexi more credit. (By Lisa Jucca)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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