Nomura Securities on U.S. Payments: 1Q12 Preview; Updating Estimates; MasterCard (MA) Top Pick

Nomura Securities on U.S. Payments: 1Q12 preview; raising estimates; MA top pick.

Analyst, Bill Carcache, said, "Key themes this quarter include Security (data breach at Global Payments (NYSE: GPN)), pricing actions, EMV, the ‘Cloud’, and credit growth. Going into the quarter, we see the greatest potential for an upside surprise from MasterCard (NYSE: MA). While we’re looking for only a modest beat (our estimates are ~1.3% above consensus for 1Q11). We’re raising our estimates for MA and Visa (NYSE: V) to reflect updated volume/transaction growth data through February (we’re also tweaking the tax rate for V this quarter post a favorable tax resolution in California). We’re also raising our estimates for Total Systems (NYSE: TSS and Alliance Data (NYSE: ADS) to reflect better-than-expected transaction growth (for TSS) and credit performance (for ADS). Finally, we’re lowering our estimates for Green Dot (Nasdaq: GDOT) to reflect the impact from the recent Loopt acquisition.

MasterCard (NYSE: MA) (Buy): 1Q12E EPS from $5.30 to $5.35 vs. Street $5.28; PT $500, Top Pick

Visa (NYSE: V) (Buy): 1Q12E EPS from $1.47 to $1.51 vs. Street $1.49; PT $140

Global Payments (NYSE: GPN) (Buy): 1Q12E $0.84 vs. Street $0.84; PT $57

Total Systems (NYSE: TSS) (Neutral): 1Q12E EPS from $0.29 to $0.30 vs. Street $0.30; PT $20

Alliance Data (NYSE: ADS) (Neutral): 1Q12E EPS from $2.23 to $2.26 vs. Street $2.15; PT $115

Green Dot (Nasdaq: GDOT) (Neutral): 1Q12E EPS from $0.49 to $0.45 vs. Street $0.45; PT $33

Western Union (NYSE: WU) (Neutral): 1Q12E EPS $0.40 vs. Street $0.40; PT $19

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