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Mastercard Incorporated (MA), headquartered in Purchase, New York, provides transaction processing and other payment-related products and services. Valued at $482.9 billion by market cap, the company offers payment processing services for credit and debit cards, electronic cash, automated teller machines, and travelers checks.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and MA definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the credit services industry. The leading global payment solutions company provides an array of services in support of credit, debit, mobile, web-based and contactless payments, and other related electronic payment programs to financial institutions and other entities, licensing payment card brands including MasterCard, Maestro, and Cirrus.
Despite its notable strength, MA has slipped 2.7% from its 52-week high of $535.77, achieved on Nov. 29. Over the past three months, MA stock gained 7.9%, underperforming the Financial Select Sector SPDR Fund’s (XLF)10.6% gains during the same time frame.
In the longer term, shares of MA rose 22.2% on a YTD basis and climbed 27.7% over the past 52 weeks, underperforming XLF’s YTD gains of 33.7% and 39.1% returns over the last year.
To confirm the bullish trend, MA has been consistently trading above its 50-day and 200-day moving averages since early August.
Mastercard's underperformance stems from growing regulatory pressures to reduce swipe fees and increasing competition from "buy now, pay later" (BNPL) platforms like Affirm Holdings, Inc. (AFRM). The rejected settlement with U.S. merchant groups may lead to further fee reductions, potentially squeezing gross margins. Additionally, Mastercard's recent acquisitions and rising competition could impact its profitability, despite a growing economy and potential interest rate cuts.
On Oct. 31, MA shares closed down more than 2% after reporting its Q3 results. Its adjusted EPS of $3.89 beat Wall Street expectations of $3.73. The company’s revenue was $7.4 billion, topping Wall Street forecasts of $7.3 billion.
Mastercard’s rival, Visa Inc. (V) shares lagged behind the stock, with a 19% rise on a YTD basis and a 21.8% gain over the past 52 weeks.
Wall Street analysts are bullish on MA’s prospects. The stock has a consensus “Strong Buy” rating from the 38 analysts covering it, and the mean price target of $560.83 suggests a potential upside of 7.6% from current price levels.
