Evercore ISI sets MasterCard stock target at $550 with In Line rating

On Tuesday, Evercore ISI initiated coverage on MasterCard shares (NYSE:MA), assigning an "In Line" rating and setting a price target of $550.00. The research firm's commentary indicated that payment networks like MasterCard, currently valued at over $600 billion in market cap, have demonstrated stability and defensive qualities among financial technology stocks, especially in fluctuating market conditions. This resilience is attributed to their consistent delivery of low to mid-teens growth in revenue and earnings per share, with InvestingPro data showing a current revenue growth rate of 10.35% and an impressive gross profit margin of 97.82%. According to InvestingPro's Fair Value analysis, MasterCard is currently trading near its fair value.

MasterCard has historically exhibited slightly faster growth compared to Visa (NYSE:V), albeit on a smaller scale, with a higher penetration and revenue yield from Value-Added Services (VAS). Despite recent market challenges, MasterCard's stock performance has been relatively strong, with InvestingPro showing a 13.28% return over the past year, although it has not quite matched Visa's in the past few weeks. According to Evercore ISI, MasterCard is expected to continue outperforming in the current market environment, maintaining its status as a defensive stronghold. InvestingPro subscribers have access to over 10 additional exclusive insights about MasterCard's financial health, which currently rates as "GREAT" with an overall score of 3.04.

When market conditions improve, MasterCard is anticipated to benefit, but possibly not as much as companies whose shares have significantly declined by 30-60% or more. The firm expressed a preference for MasterCard over Visa at present due to valuation metrics, with InvestingPro data showing MasterCard trading at a P/E ratio of 29.34, and the fact that MasterCard's shares have shown a modest decline of 1.01% year-to-date.

The analyst also mentioned that in more stable market conditions, the key consideration for investors would be the relative performance and weighting of MasterCard in their portfolios compared to benchmarks, expressing optimism about a return to such a market in the near future.

In other recent news, Visa has made a substantial bid of approximately $100 million to replace Mastercard as the network provider for the Apple (NASDAQ:AAPL) Card. This move is part of a larger competition among major payment networks, including American Express (NYSE:AXP), to secure a partnership with Apple, as Goldman Sachs plans to exit the consumer lending sector. The Apple Card, with over 12 million users and $17 billion in receivables projected by September 2024, is a highly sought-after asset among financial institutions. Analysts have noted that Visa and Mastercard hold certain advantages over American Express in terms of network capabilities, which could influence Apple's decision in selecting a new partner.

Additionally, Visa is reportedly in talks with World Network to integrate Visa card functionality into self-custody cryptocurrency wallets. This potential partnership aims to expand Visa's reach within the fintech and cryptocurrency sectors. The integration would allow World Network wallet users to access various financial services, including stablecoin-based payments. Meanwhile, Visa has also reported significant achievements in combating fraud through its newly established Scam Disruption department, which has prevented over $350 million in scam attempts in 2024.

The department's efforts are part of Visa's broader strategy to enhance its anti-fraud capabilities, with over $12 billion invested in technology over the past five years. Visa's proactive approach includes collaboration with financial institutions and law enforcement to dismantle scam operations, emphasizing the importance of collective efforts in combating fraud. These developments underscore Visa's commitment to innovation and security in the payment industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.