Why analyst says now it's easier to buy these 2 payment stocks

Investing.com -- Morgan Stanley said sentiment around Mastercard and Visa has improved after a key political setback for the Credit Card Competition Act (CCCA), easing a major source of regulatory uncertainty that had kept some investors on the sidelines.

Analyst James Faucette wrote in a note to clients on Tuesday that the Politico report showing Senator Roger Marshall “agreed not to offer a credit card amendment” during a Senate Agriculture Committee markup last week reduces the risk that the CCCA will be attached to moving legislation.

According to Morgan Stanley, investors had been watching closely for “headline risk around the CCCA,” with many preferring to wait until the threat appeared lower.

Faucette believes the latest developments “should assuage near-term fears among investors about the likelihood of the CCCA being successfully attached, which makes the networks easier to buy.”

The firm noted that the CCCA had long been viewed as unlikely to advance because it “forces Congress to choose between powerful constituents, including banks and major retailers.”

Morgan Stanley added that the Politico report signals the strategy of attaching the bill to an unrelated act “was unsuccessful, similar to historical attempts.”

Even in a downside scenario in which the bill passes, Faucette feels the financial impact on both companies would be limited.

The bank’s scenario analysis assumed a shift of 10% of U.S. credit volumes to alternative networks and approximately “25% price pressure on US credit fees,” resulting in only around a “3.5% 2026E revenue impact for Visa, and ~2.5% impact to Mastercard.”

Faucette stated that competitive dynamics would unfold gradually, giving both networks time to “renegotiate pricing, and adjust costs to defend volumes and revenues.”

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