J.P Morgan Gives Rating Changes (HPY, ADS); Lowers PT On (MA, V)

J.P Morgan recently lowered its PT on Mastercard MA to $277 from $315 as well as Visa V to $85 from $103. It prefers MA over V. Regulation remains the big unknown, and JP Morgan sees limited direction for payment processing stocks until the Fed finalizes its debit rules on April 21. The impact is greatest at the top of the food chain, where V and MA sit, and the uncertainty overhang could weigh on the entire group's valuation since V/MA tend to dictate sentiment for the group. JP Morgan is downgrading Heartland Payment Systems HPY to Underweight from Neutral given full valuation and what it believes is low likelihood of benefiting from regulation or consolidation in the near term. It also downgrades Alliance Data Systems ADS to Neutral from Overweight. JPM continues to think ADS is well positioned to benefit from the ongoing shift toward database/ROI marketing, but we think this view and the eventual release of credit reserves are largely reflected in the shares at current levels. MA closed Thursday at $233.51 V closed Thursday at $71.14 HPY closed Thursday at $16.23 ADS closed Thursday at $72.27