Is Mastercard Stock Underperforming the Nasdaq

Based in Purchase, New York, Mastercard Incorporated (MA), a prominent force in the realm of digital payments, stands out for its extensive payment processing capabilities and innovative solutions that drive the global economy. With a market cap of $412 billion, a robust market presence, and a reputation for reliability and efficiency, Mastercard competes fiercely with other financial powerhouses, including Visa Inc. (V), known for its comprehensive financial services network, and American Express (AXP), distinguished by its premium customer service and exclusive credit card offerings.

Companies worth $200 billion or more are generally described as "mega-cap stocks," and Mastercard definitely fits that description. As a long-time market leader in financial services, MA has secured a dominant position in the global payments market, fostering strong brand loyalty. This loyalty is reinforced by MA's innovative payment solutions and advanced technologies, resulting in steady recurring revenue.

Shares of Mastercard have dropped 9.2% from their 52-week high of $490, reached on March 21. Over the past three months, MA's shares have declined 5.1%, underperforming the broader Nasdaq Composite ($NASX), which gained 4% during the same period.

Longer term, MA is up 4.3% on a YTD basis, and the shares are now holding onto a solid gain of 19% over the past 52 weeks. In comparison, the Nasdaq is up 12.3% in 2024 and 27.3% over the past year.

To confirm its bullish price trend, MA has been trading above its 200-day moving average since early November.

Despite higher borrowing costs and ongoing inflation, wage growth and a tight labor market have enhanced job security and spending power among cardholders. However, Mastercard's Q1 earnings report, released on May 1, could not boost the stock price despite the company exceeding Wall Street expectations. The stock declined 2% on the day of the announcement.

MA's top competitor, Visa, has delivered almost a similar performance, gaining 19.1% over the last 52 weeks.

Despite the recent weakness in the stock price, analysts are optimistic about MA's prospects. The stock has a consensus rating of "Strong Buy" from 32 analysts in coverage. The mean price target of $498.41 reflects a 12.1% premium to current levels.

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On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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