Mastercard's (MA) Hidden Guidance Cut - UBS

UBS analyst, Matthew Howlett, cut the Mastercard (NYSE: MA) PT to $107 as the company beat low expectations and offerd guidance that included one time benefits. That said, the analyst sees the longer term headwinds reversing, leaving MA as a company taking a greater share of worldwide spend.

After additional disclosures from management, UBS pegs core EPS at $0.69 which would be $0.03 expectations and in-line with consensus. While management reaffirmed 3- year guidance of a mid-teens EPS CAGR–constant currency, they (like Visa) warned that 2016 could be on the low-end as FX uncertainty remains elevated. Backing out some non-recurring gains in 2015, management effectively lowered target 2016 EPS to $3.50.

The long term back drop of double digit payment growth and expanding operating margins remains fully intact. We expect that current headwinds such as USD, lower gas prices, and emerging market volatility will abate and then reverse. Moreover, we see no degradation in long term earnings power. In fact, we take a glass half full view and believe MA is outperforming amid weaker macro factors.

The Price Target goes to $107 from $112, based on an unchanged 25x P/E multiple applied to 2017 earnings of $4.29, down from $4.52.

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 $89.03 yesterday.

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