Piper Jaffray Initiates Coverage on MasterCard (MA) with a Buy

June 11, 2009 7:31 AM EDT

Piper Jaffray & Co. initiates coverage on MasterCard (NYSE: MA) with a Buy. Price target $222.

Piper analyst says, "We believe the current valuation of MasterCard's shares offers investors a compelling entry point relative to its long-term earnings power potential. MasterCard's valuation is essentially in-line with the overall market multiple for the S&P 500 despite having a well above average long-term earnings growth profile and manageable risks to earnings, in our view."

"MasterCard's valuation discount vs. Visa (NYSE: V) is near its widest ever. We expect MA to trade at a discount to V over the long-term, largely because of MA's smaller debit footprint and higher risk to common shareholders on any interchange litigation settlement. However, MA's shares are currently trading at the high-end of their historical discount range vs. V's shares, suggesting to us that the valuation discount is unlikely to widen much further and could narrow as MA continues to exceed expectations and its revenue growth accelerates."

To see more analyst ratings on MA Click Here.

MasterCard Incorporated, together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers cheque programs.

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