Barclays on U.S. IT Consulting & Computer Services: Card Networks 3Q11 Preview: Resilient Spend Trends Support Solid EPS Results
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Price: $331.15 -2.57%
Rating Summary:
23 Buy, 23 Hold, 3 Sell
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
23 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays on U.S. IT Consulting & Computer Services: Card Networks 3Q11 Preview: Resilient Spend Trends Support Solid EPS Results
Barclays analyst, Darrin D. Peller, said, "We expect strong calendar 3Q11 results from Visa (10/25) and MasterCard (11/2). Recent spend metrics released from the card issuers and merchant acquirers, as well as intra-quarter data points provided by the card networks, suggest that spending remains resilient, even in an uncertain macroeconomic environment. Additionally, our analysis of recent travel data points (combined with updated worldwide travel sales released by AmEx (NYSE: AXP)) indicates that cross-border activity has held up year-to-date and should be stable through the end of the year."
"Visa (NYSE V): We are estimating 4Q FY11 EPS of $1.27 (vs the consensus estimate of $1.25) and revenues of $2.41 billion (vs the consensus estimate of $2.39 billion). While the stock has outperformed the S&P 500 by ~700bps over the last two months (and outperformed MA by 800bps), and V shares currently trade at 16.3x our FY12 estimate (15.5x our CY12 estimate), roughly 4 points above the market multiple, the stock is still only two points above trough levels seen in 2009 (and historically has traded at a roughly 3-point premium to MA)."
"MasterCard (NYSE: MA): We are estimating 3Q11 EPS of $4.87 (vs the consensus estimate of $4.81) and revenues of $1.73 billion (vs the consensus estimate of $1.71 billion). With the proven resiliency of the company's revenues and operating margins, along with management recently reiterating that its FY11 guidance factors in continued macroeconomic uncertainty, we continue to see solid growth from secular trends and upside to the shares from current levels (with a potential upcoming announcement regarding the company's debit business that may serve as a positive catalyst)."
Barclays reiterates an Overweight rating on V & MA
Barclays analyst, Darrin D. Peller, said, "We expect strong calendar 3Q11 results from Visa (10/25) and MasterCard (11/2). Recent spend metrics released from the card issuers and merchant acquirers, as well as intra-quarter data points provided by the card networks, suggest that spending remains resilient, even in an uncertain macroeconomic environment. Additionally, our analysis of recent travel data points (combined with updated worldwide travel sales released by AmEx (NYSE: AXP)) indicates that cross-border activity has held up year-to-date and should be stable through the end of the year."
"Visa (NYSE V): We are estimating 4Q FY11 EPS of $1.27 (vs the consensus estimate of $1.25) and revenues of $2.41 billion (vs the consensus estimate of $2.39 billion). While the stock has outperformed the S&P 500 by ~700bps over the last two months (and outperformed MA by 800bps), and V shares currently trade at 16.3x our FY12 estimate (15.5x our CY12 estimate), roughly 4 points above the market multiple, the stock is still only two points above trough levels seen in 2009 (and historically has traded at a roughly 3-point premium to MA)."
"MasterCard (NYSE: MA): We are estimating 3Q11 EPS of $4.87 (vs the consensus estimate of $4.81) and revenues of $1.73 billion (vs the consensus estimate of $1.71 billion). With the proven resiliency of the company's revenues and operating margins, along with management recently reiterating that its FY11 guidance factors in continued macroeconomic uncertainty, we continue to see solid growth from secular trends and upside to the shares from current levels (with a potential upcoming announcement regarding the company's debit business that may serve as a positive catalyst)."
Barclays reiterates an Overweight rating on V & MA
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