Analysts maintained their conviction on Mastercard Incorporated post Q1 results. Despite Mastercard’s 1Q22 10 percent broad-based beat, Barclays analyst James Fotheringham lowered estimates marginally (by as much as 2 percent) due to revenue headwinds expected from exiting Russia.
Fotheringham also cut the target price to $402 (from $412) and rated the stock as Outperform. The revised 2022E guidance for GAAP net revenue growth at the high end of mid-teens percent YoY (versus prior high-teens percent) implies elevated cross-border activity (now 112 percent of 2019 levels ex-Russia) should partially offset the revenue impact from exiting Russia for the remainder of this year.
Fotheringham recommended Mastercard and Visa Inc. as a core long-term FIG holding.
RBC had an Outperform and raised the price target on Mastercard from $403 to $417.
Despite high expectations post-Visa’s print, MA did not disappoint, with broad-based topline outperformance, particularly in cross-border revenues, which increased ~57 percent y/y on a currency-neutral basis.
In addition, the adj. EPS beat was aided by a ~$0.36 tax benefit. Thus, the reported number ex. the tax benefit, was closer to $2.40, still 16 percent above RBC’s estimate and 11 percent above the Street.
Citi saw Mastercard kick off FY22 with a strong beat with 53 percent FX-neutral cross-border volume growth as a standout through the broad strength, including U.S retail spending, positive Europe (with geopolitical risks heightened), and still strong LatAm.
Volume strength was robust across a broad number of sectors.
Mastercard also highlighted several issuer and co-brand wins and product updates. Credit growth was solid, and as expected, debit growth was muted due to the stimulus impact from last time.
Mastercard laid out the details of the Russia–Ukraine impact, much of which was already in Citi’s model, though the cost updates were better than assumed.
Even though macro risks have grown, Citi’s estimates and price targets have risen. Citi reiterated its Buy on Mastercard.
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