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On Thursday, Raymond (NSE:RYMD) James maintained an Outperform rating on MasterCard (NYSE:MA) shares and increased the price target from $614.00 to $640.00. Currently trading at $566.01, the stock is near its 52-week high with a market capitalization of $518.28 billion. The adjustment follows MasterCard’s fourth-quarter results, which surpassed expectations with approximately a 3% earnings per share (EPS) beat and around a 1% revenue beat compared to Wall Street forecasts. According to InvestingPro analysis, the company maintains a GREAT financial health score of 3.19, reflecting its strong market position.
The company’s quarter-to-date volume trends have remained largely consistent with the fourth quarter’s performance. Notably, there was a 100 basis point acceleration in U.S. volumes, which rose to +10%, a figure that was better than anticipated. Building on its impressive 11.73% revenue growth over the last twelve months, the financial services firm’s initial forecast for fiscal year 2025, adjusting for foreign exchange, predicts organic revenue growth of approximately 12-13%. This forecast aligns with the Street’s expectations of a 12.1% increase in reported revenue. InvestingPro subscribers can access 12 additional key insights about MasterCard’s growth trajectory and financial performance.
Despite the positive outlook, MasterCard anticipates operating expenses to rise in the low-teens percentage, which is slightly above the Street’s projection of a 9.7% increase. Additionally, higher other expenses are expected, which may lead to a slight decrease in Street EPS estimates. However, Raymond James suggests that the operating expense outlook might be conservative, especially if top-line growth exceeds initial projections.
The analyst at Raymond James highlighted MasterCard’s continued excellent execution and noted that while the initial guidance might lead to lower estimates, this is primarily due to foreign exchange fluctuations and deal-related operating expenses. The firm views the risk/reward balance for MasterCard’s stock favorably. The stock is currently trading at approximately 29 times Raymond James’s fiscal year 2026 EPS estimate, which represents about an 8% discount to its historical premium compared to the S&P 500 Equal Weight. The firm believes that estimates for MasterCard are likely to be adjusted upwards due to the company’s durable long-term double-digit top-line growth.
In other recent news, MasterCard has seen several noteworthy developments. The company reported a solid revenue growth of nearly 12% for the fourth quarter and full year of 2024. Jefferies has raised MasterCard’s price target to $660 and maintained a ’Buy’ rating, indicating a belief in the company’s potential for growth. On the other hand, Seaport Global Securities downgraded MasterCard’s stock rating from ’Buy’ to ’Neutral’, citing the lack of a clear catalyst for stock value growth.
In addition, MasterCard and Visa (NYSE:V) have been implicated in a whistleblower complaint alleging involvement in money laundering associated with the website OnlyFans. The complaint suggests that both companies were aware of illicit revenue streams on the platform since at least 2021.
In the same vein, Bernstein analysts maintained their ’Outperform’ rating on Visa shares and increased their price target, reflecting a positive outlook for Visa’s growth, particularly in international markets. Keefe, Bruyette & Woods expressed optimism about several payment processing companies, including MasterCard, ahead of their fourth-quarter earnings reports. These recent developments highlight the dynamic landscape of the payment processing industry.
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