On Wednesday, Evercore ISI adjusted its outlook on MasterCard (NYSE: MA), reducing the price target slightly to $540 from the previous $545, while reaffirming an Outperform rating on the stock. The revision follows MasterCard's first-quarter earnings call for the year 2024, where the firm cited foreign exchange (FX) headwinds as the primary reason for the adjustment to its earnings per share (EPS) estimates for the years 2024 to 2026.
The company has maintained its FX neutral revenue growth guidance for 2024, attributing the steady outlook to strong consumer spending, an expanding international footprint, and increased adoption of value-added services. Despite the optimistic growth indicators, Evercore ISI has revised its EPS forecasts for MasterCard downward by $0.40 for 2024, and by $0.10 for both 2025 and 2026, setting the figures at $14.40, $17.20, and $20.10 respectively.
Following these revisions, Evercore ISI's EPS estimate for 2024 aligns with the consensus. However, the firm's projections for 2025 and 2026 remain more optimistic, standing 3% and 2% above consensus, respectively. The new price target of $540 is based on a 31x multiple of the anticipated 2025 EPS.
The analysis continues to favor MasterCard, maintaining the stock as the #2 Top Pick despite the modest reduction in the price target. This stance reflects confidence in the company's ability to navigate through the mentioned FX challenges while capitalizing on its robust fundamentals.
InvestingPro Insights
MasterCard's (NYSE: MA) recent performance and future prospects have caught the attention of investors and analysts alike. With Evercore ISI's updated price target and an Outperform rating, it's beneficial to delve into some key metrics and tips from InvestingPro for a comprehensive view. MasterCard's market capitalization stands robust at $411.4 billion, reflecting its significant presence in the financial sector. Despite trading at a high earnings multiple with a P/E ratio of 37.56, the company has shown a substantial revenue growth of 12.87% over the last twelve months as of Q4 2023, signaling a strong financial trajectory.
An InvestingPro Tip that aligns with Evercore ISI's confidence is MasterCard's history of raising its dividend for 12 consecutive years, indicating a commitment to shareholder returns. Additionally, as a prominent player in the Financial Services industry, MasterCard's ability to generate cash flows that sufficiently cover its interest payments is another positive sign for investors. For those considering an investment in MasterCard, there are more InvestingPro Tips available, including an analysis predicting the company will remain profitable this year and a high return over the last decade, which can be further explored with a subscription. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With the next earnings date approaching on May 1, 2024, and a fair value estimation by analysts at $510, compared to InvestingPro's fair value of $433.12, investors have valuable data points to consider. It's worth noting that MasterCard's ability to maintain dividend payments for 19 consecutive years is a testament to its financial stability and investor-friendly approach. For those looking to deepen their analysis, InvestingPro offers a total of 10 additional tips that can provide further insights into MasterCard's investment potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.