Buckingham Research Initiates Coverage on Mastercard (MA) with a Strong Buy

July 17, 2008 10:14 AM EDT

Buckingham Research initiates coverage on Mastercard (NYSE: MA) with a Strong Buy. Price target $340.

Buckingham analyst says, "Under a bearish GDV and net revenue growth forecast, we estimate fair value for MasterCard to be about $280 and under a more bullish scenario, with faster GDV and net revenue growth, our estimate of fair value is about $450 per share. MasterCard is one of only two companies with large, very scalable processing businesses tied directly to the worldwide growth in electronic payments. Despite the fact that the company does not lend to consumers and is therefore not exposed to credit risk, MA shares appear to have been depressed by concerns about current economic weakness and its possible effect on consumers’ finances. While the general benefits to MasterCard of growth in electronic payments are known, we don’t believe investors fully appreciate the potential financial impact of this massive multi-year shift from ’paper’ to ‘plastic’ or the extent of the likely increases in operating leverage longer term."

MasterCard Incorporated (MasterCard) is a global payment solutions company that provides a variety of services in support of the credit, deposit access (debit), electronic cash and automated teller machine (ATM) payment card programs, travelers check programs and related payment programs of over 25,000 financial institutions that are its customers.

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