Mastercard's Conservative Outlook and Relative P/E Discount Make It a Favorable Bet: Analysts Raise Price Targets

Raymond James analyst John Davis maintained an Outperform rating on Mastercard Inc MA with a price target of $453.

The re-rating followed solid 2Q results that featured ~2% upside to revenue and EPS relative to the Street. 

Moreover, the company reiterated the year's outlook and the 3Q guide was mainly in line as revenue will likely grow low-teens (vs. Street 14%) and opex LDD (vs. Street 11%). 

That said, the low-teens top-line growth in 3Q implies 400-500 bp of organic. 

FXN deceleration (Visa Inc V guided ~250 bp deceleration) despite only modest QTD deceleration, and we expect the revenue outlook to prove conservative. 

Additionally, the company noted several vital wins, including Unicredit, Fiserv, Tim Hortons, and Deutsche Bank's credit and debit conversions are now underway. 

With the stock trading at a discount to its historical relative P/E (~50% premium to the S&P 500 vs. 5-year AVG ~70%), coupled with what he views as a conservative outlook, he continues to consider the risk/reward favorably. 

Wells Fargo analyst Donald Fandetti maintained Mastercard with an Overweight and raised the price target from $425 to $440.

BMO Capital analyst James Fotheringham maintained Mastercard with an Outperform and raised the price target from $463 to $488.

Baird analyst David Koning maintained Mastercard with an Outperform and raised the price target from $435 to $450.

Price Action: MA shares are trading lower by 1.15% at $390.00 on the last check Friday.

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