FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
63,197,791Confirmed
1,467,485Deaths
43,694,028Recovered
Fetching Location Data…
Advertisement
Advertisement
Vivek Kumar

Mastercard Inc, a leader in global payments and a technology company, reported a lower-than-expected profit in the third quarter as people cut on their spending amid the COVID-19 led economic recession, sending its shares down over 6% on Wednesday.

The U.S. multinational financial services corporation said its net income plunged 28% to $1.5 billion or $1.51 per share in the third quarter. Excluding items, profit was $1.60 per share. That was lower than the market expectations of $1.66.

“A rare EPS miss ($1.60 vs. JEFe/Street $1.63/$1.65) as revs came in ~3% light of Streeton notable weakness in Other, Cross-Border, and lower yields in Txn Processing. OpEx~6% below Street helped partially offset. US vols. through Oct. likely skewed by Prime Day, and could imply m/m decel when normalized, while Int’l rebound continues. Cross-Border ex-EU still down mid 40’s y/y, as card-present vols. retraced in Oct, coinciding w/tighter COVID restrictions,” said Trevor Williams, equity analyst at Jefferies, who gave a target price of $330.

“The continued recovery in International vol. growth (-3% July, +1% Aug, ~flat Sept, +1% Oct) is one silver lining in the results,” Williams added.

The credit services provider said its third-quarter net revenue decreased 14% on both an as reported and a currency-neutral basis to $3.8 billion. Third-quarter gross dollar volume up 1% and purchase volume up 2%, returning to positive territory, the company said.

At the time of writing, Mastercard traded over 6% lower at $296.95 on Wednesday; the stock is down about a percent so far this year.

Executive Comments

“We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge. Meanwhile, we are winning new business in core payments and are making real progress with our digital solutions, differentiated service offerings and multi-rail capabilities,” said Ajay Banga, Mastercard CEO.

Advertisement

Mastercard Stock Price Forecast

Twenty-two equity analysts forecast the average price in 12 months at $370.32 with a high forecast of $415.00 and a low forecast of $330.00. The average price target represents a 24.80% increase from the last price of $296.74. From those 22 analysts, 19 rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $359 with a high of $417 under a bull-case scenario and $215 under the worst-case scenario. The firm currently has an “overweight” rating on the credit services provider’s stock. Mastercard had its stock price forecast increased by KeyCorp to $365 from $340. The brokerage currently has an “overweight” rating.

Several other analysts have also recently commented on the stock. Barclays increased their price objective on shares of Mastercard to $385 from $360 and gave the stock an “overweight” rating in Sept. Royal Bank of Canada reissued a “buy” rating. In July, Daiwa Capital Markets reissued a “neutral” rating and set a $314 price target. Goldman Sachs Group initiated coverage with a “buy” rating and a $364.00 price target.

Analyst Comments

“Mastercard (MA) is one of our preferred stocks in the space. MA’s compounding growth drivers include resilient global consumer spend growth, market share gains, and the secular shift to card from cash. As the second-largest global card network (behind Visa), MA is well-positioned to benefit from market share gains in particular regions and consumer spending trends, which have been fairly resilient even through economic cycles,” said James Faucette, equity analyst at Morgan Stanley.

“These trends should support double-digit revenue growth over the next few years. High incremental margins and opportunities to expand its Vocalink and B2B capabilities should enable the company to drive compounding earnings growth longer term,” Faucette added.

Upside and Downside Risks

Upside: 1) Uptick in consumer spending trends. 2) New client wins in the US/Europe – highlighted by Morgan Stanley.

Downside: 1) Impact from regulatory action in Europe and elsewhere. 2) Material slowdown in consumer spending. 3) Potential for market share loss in Europe as V becomes more aggressive.

Check out FX Empire’s earnings calendar

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US