Compass Point Starts MasterCard (MA) at Neutral

Compass Point initiates coverage on MasterCard (NYSE: MA) with a Neutral rating and a price target of $95.00.

Analyst John Williams commented, "We initiate coverage of MA with a Neutral rating and $95 price target. MA benefits from favorable secular trends and high operating leverage, and a defensible model and moat. We see modest upside to estimates over the next three months, but are Neutral-rated given (1) slowing global consumer spending in some markets, (2) smaller market share that requires MA to spend more on rebates and incentives, (3) full valuation (>25x FTM EPS) despite recent dollar weakness, and (4) opportunities for pricing upside in Europe on the heels of the Visa Europe acquisition. We note that since the Visa IPO, a forward multiple greater than 25x forward earnings for MA has not generally been a good time to buy the shares (forward returns on 3/6/12-month time frames have been quite negative)—a trend we believe will continue. While we see more risk to the multiple than to EPS, compression in either would hurt. Considering MA's more global exposure (Europe is 28% of spending volume for MA, international ex-Europe is 48% for V), we expect MA will remain the “higher beta” choice vs. V given continued growth concerns and newsflow outside the US. "

For an analyst ratings summary and ratings history on MasterCard click here. For more ratings news on MasterCard click here.

Shares of MasterCard closed at $96.17 yesterday.

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