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Goldman Is Modeling For MasterCard Shares To Recover, But Warns Of Few Near-Term Catalysts

Goldman Is Modeling For MasterCard Shares To Recover, But Warns Of Few Near-Term Catalysts - Mastercard Incorporated NYSE:MA

Goldman Sachs’ James Schneider expects Mastercard Inc MA to report its 2Q16 results marginally ahead of the consensus expectations, given the stable retail sales data.

Schneider maintains a Buy rating on the company, with a price target of $118.

2Q Expectations

“We are encouraged by underlying retail data, particularly in the US (where steady growth in 2Q beat expectations) and LatAm, but note modest softening in Europe and APAC,” the analyst mentioned.

The euro appreciated during 2Q, while FX headwinds for the GBP and BRL moderated. For 3Q, Schneider believes that while the GBP significantly depreciated after the Brexit vote, MasterCard was likely to witness net FX benefit from the appreciation of the BRL.

Stock Expectations

“We expect the stock to recover slightly coming out of the quarter as volume acceleration and the moderation of FX headwinds are not fully reflected in Street estimates,” Schneider stated.

However, the analyst cautioned that there were few catalysts to drive the stock sustainably higher in the near term, especially considering the expectations of near-term weakening in volume growth in 2H, following the loss of USAA.

“However, we recognize that MasterCard continues to execute well in Europe and is seeing good momentum. Over the longer term, we continue to see multiple opportunities for MasterCard to drive improving growth heading into 2017, particularly in Europe,” Schneider added.

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DateFirmActionFromTo
Jul 2016BarclaysMaintainsOverweight
Apr 2016CitigroupMaintainsBuy
Apr 2016Compass PointInitiates Coverage onNeutral

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