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Stacking Up Mastercard And Visa's Recent Q3 Earnings And Outlook: Mind The Gap

Nov. 01, 2021 8:50 AM ETMastercard Incorporated (MA), V32 Comments
AlphaTech Equities profile picture
AlphaTech Equities


  • Since our last report on MA, exactly a year ago where we rated the stock a “Sell”, it has significantly underperformed the S&P Index by 25% and Nasdaq by 56%.
  • Mastercard's recent Q3 2021 non-GAAP EPS @ $2.37 beat consensus by 8.2% and revenue print @$5bn was 1% higher.
  • Q4 outlook is better than Visa's with revenue expected to increase in the mid-20%s and non-GAAP operating expenses expected to increase in the high teens, conferring EPS increase of c.38%.
  • We see valuation chasm based on NTM PE between Visa (29x) and MA (34x) as justified given MA’s premium growth profile.
  • Re-valuations for Mastercard, we use an average pre-pandemic NTM PE of 28x to arrive at our 12-month price target of $360, imputing an upside of ~8% and upgrade our rating to “Neutral”. We see better value for investors elsewhere.

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Mastercard delivered a strong Q3 revenue and EPS beat

Mastercard's (NYSE:MA) Q3 non-GAAP EPS @ $2.37 beat consensus by 8.2% and revenue print @$5bn was 1% higher. The beat was mainly driven by higher than expected cross-border revenue which

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