Raymond James Raises Mastercard Price Target, Says Quarter-To-Date Performance 'Surprisingly Strong'

Mastercard Inc MA reported strong fourth-quarter results Jan. 31 and announced higher-than-expected guidance, despite a slightly weaker macro environment.

The company seems to be “firing on all cylinders,” and its performance so far in the current quarter has been better than expected, against the backdrop of softer global growth, according to Raymond James.

The Analyst

Analyst John Davis maintained an Outperform rating on Mastercard and raised the price target from $229 to $247.

The Thesis

Mastercard reported Q4 adjusted EPS at $1.55, beating the consensus by 3 cents. The company generated revenue growth of 14.9 percent, marginally higher than the 14.7 percent the Street expected.

Although gross revenues were slightly weaker, the shortfall was overcome by lower incentives. More importantly, Mastercard’s FX-adjusted revenue growth came in at a healthy 17 percent, Davis said in a Friday note.

The credit card issuer's 2019 and three-year guidance reflect its recent share gains and highlight the sustainability of the company's growth profile, the analyst said. As concerns around the macro slowdown ease, the stock may outperform in the weeks ahead, with investors resizing positions, he said. 

Mastercard’s quarter-to-date performance has been “surprisingly strong,” with estimated 17-percent growth in global switched transactions, according to Raymond James.

The firm revised its adjusted EPS estimates for 2019 and 2020 from $7.64 to $7.59 and from $8.95 to $8.99, respectively.

Price Action

Mastercard shares were up 0.24 percent at $214.28 at the time of publication Monday. 

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Photo courtesy of Mastercard.