Mastercard Analysts Lift Expectations After Q1 Beat

Mastercard Inc MA’s strong first-quarter print is charging up the sell-side, with several analysts raising price expectations for the credit card network. 

Mastercard reported adjusted earnings of $1.78 per share Tuesday that topped estimates by more than a dime and were up nearly 19 percent year-over-year, driven by higher revenue of $3.89 billion — also a slight beat.

The Analysts

Guggenheim’s Jeff Cantwell maintained a a Buy on Mastercard and raised the target price from $239 to $275. 

BMO Capital Markets analyst James Fotheringham maintained an Outperform and raised the price target from $254 to $274. 

Mizuho’s Thomas McCrohan maintained a Buy rating and raised the price target from $255 to $270. 

The Theses

Guggenheim’s Cantwell said payment volume was slightly below expectations, but still showing strong growth, especially domestically. “Importantly, we see MA’s long-term outlook continuing to improve after several positive announcements in 1Q,” the analyst said in a note. 

BMO’s Fotheringham also liked Mastercard’s first-quarter performance, but said BMO still prefers competitor Visa Inc V, which it also has rated Outperform, on a valuation basis. Mastercard has “above-average potential to surprise positively with respect to future revenue growth," he said. 

Fundamentals and ongoing strength in the global spending outlook keep Mizuho’s McCrohan bullish. The analyst said he likes that the results beat expectations even with a moderation in volume, and said growth moderation may not be so bad, as it was related heavily to the timing of the Easter holiday.

McCrohan also said he likes MA’s “very strong expense control.”

Price Action

Mastercard shares were trading down nearly 1 percent at $251.73 at the time of publication Wednesday. 

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