Street Calls of the Week
Investing.com -- Jefferies believes Visa (NYSE:V) is better positioned than Mastercard (NYSE:MA) heading into 2026, even as it continues to view the latter as the stronger long-term story.
Mastercard still benefits from “value-added services (VAS) portfolio, stronger secular tailwinds with international mix, margin runway,” analyst Trevor Williams said, but believes that Visa has the more favorable near-term setup.
Visa’s growth algorithm for fiscal 2026 (FY26) points to just over 10% constant-currency revenue expansion, supported by a bigger pricing tailwind and slowing growth in client incentives. Williams added that if VAS growth reaches 20% instead of the 18% base case, Visa’s revenue growth could edge closer to 11%.
Mastercard is currently trading at about a 21% valuation premium to Visa, compared with a five-year average premium of 17%.
Williams expects that gap to shrink, as Visa’s revenue growth in FY26 is projected to trail Mastercard’s by only 0.5 to 1.5 percentage points, compared with a gap of 2 to 3 percentage points in FY25. The analyst also sees more near-term upside to estimates given Visa’s conservative third-quarter guidance.
He sees Visa’s path to growth as “undemanding,” with the benefit of 1.5 years of pricing impact, lower incentives drag, and improving cross-border mix offsetting weaker currency volatility.
On the other hand, Mastercard is expected to face headwinds from the Capital One debit de-conversion in the U.S. and the Lloyds U.K. credit portfolio flip to Visa.
Williams estimates these changes will weigh on Mastercard’s volume growth, driving U.S. growth down to about 4% in early 2026, while Visa is expected to outgrow Mastercard by as much as 250 basis points in the U.S. at peak.
Lower currency volatility and higher rebates and incentives also add pressure, leaving Mastercard’s revenue growth to decelerate to around 11.5% from 13–14% in 2025. Williams noted, however, that this still leaves Mastercard within its medium-term target of maintaining low-double-digit growth.
Both companies continue to post strong expansion in VAS. In the second quarter, Visa’s VAS growth accelerated to 26% year-on-year, outpacing Mastercard’s 18%. Williams sees Visa VAS revenue growing 18% in 2026, while Mastercard maintains a high-teens growth rate.
Jefferies maintains Buy ratings on both stocks, with targets of $410 for Visa and $675 for Mastercard.