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Mastercard Incorporated (MA), headquartered in Purchase, New York, provides transaction processing and other payment-related products and services. Valued at $418.18 billion by market cap, the company offers payment processing services for credit and debit cards, electronic cash, automated teller machines, and travelers checks.
Shares of this leading global payment solutions provider have underperformed the broader market over the past year. MA has gained 14.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 15.1%. In 2024 alone, MA’s stock rose 5.7%, compared to the SPX’s 9% rise on a YTD basis.
Narrowing the focus, MA’s underperformance looks more pronounced compared to the S&P 500 Financials Sector SPDR (XLF). The exchange-traded fund has gained about 18.9% over the past year. The ETF’s 10.9% returns on a YTD basis outshine the stock’s returns over the same time frame.
On Jul. 31, MA shares closed up more than 3% after reporting its Q2 results. Its adjusted EPS of $3.59 surpassed Wall Street expectations of $3.51. The company’s revenue was $6.96 billion, topping Wall Street forecasts of $6.85 billion. Its payment network net revenue increased 7% or 9% on a currency-neutral basis. It registered gross dollar volume growth of 9% and purchase volume increased 10% on a local currency basis.
On Jul. 10, MA shares closed down more than 2% after Bank of America Global Research downgraded the stock to Neutral from Buy.
For the current fiscal year, ending in December, analysts expect MA to report an EPS growth of 16.5% to $14.28 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 35 analysts covering MA stock, the consensus rating is a “Strong Buy.” That’s based on 30 “Strong Buy” ratings, three “Moderate Buys,” and two “Holds.”
This configuration is more bullish than three months ago, with 27 suggesting a “Strong Buy.”
Recently, Barclays maintained an “Overweight” rating on MA stock and raised the price target from $530 to $536, implying a potential upside of 19.1% from current levels.
The mean price target of $509.90 represents a 13.4% premium to MA’s current price levels. The Street-high price target of $615 suggests an ambitious upside potential of 36.7%.
On the date of publication, Neha Panjwani 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.
