Goldman Sachs Finds Mastercard Shining In 2024 Despite Weak Industry Outlook

Goldman Sachs analyst raised the price target for Mastercard Inc MA to $482 (from $433) and maintained a Buy rating.

The analyst expects a mixed outlook for overall credit card spending and anticipates card volume growth to decelerate globally and domestically by ~70bps and ~100bps, respectively, due to softening inflation, slower GDP growth, and tightening consumer belts.

However, the analyst expects consistent spending trends in 2024 as in H2 FY23.

Also Read: Did Your Holiday Shopping Follow National Trend? Mastercard's Data Shows Online Sales Surge And In-Store Rise

The analyst sees uncertainty related to average ticket sizes, which have underperformed despite continued elevated inflation (U.S. ticket sizes declined 1%-2% in H2 FY23) even after adjusting for gas prices, and can be attributed to consumer behavioral shifts in response to higher prices.

Consequently, the analyst expects U.S. volume growth of ~8% (vs ~6% in H2 2023) in 2024 but projects intermediate-term growth in U.S. card volumes in the 6%-8% range and the ~8%-10% range globally.

The analyst expects MA to guide to high teens EPS growth in 2024. In particular, the analyst estimates EPS in the range of $14.14-$14.20 vs. consensus of $14.23 for FY24.

Also Read: Credit Card Juggernaut Mastercard's Bold Financial Play: Dividend Hike & Massive Buyback

Price Action: MA shares are trading lower by 0.26% at $427.16 on the last check Thursday.