Mastercard: Consistent Double-Digit Growth, Still Reasonably Priced

Company Update (MA US) (Buy)

Highlights

• Volume, revenue and EBIT have continued to grow at teens

• Consumer spending remains resilient, including in Europe

• Regulatory backdrop is benign and Mastercard is testing A2A

• P/E is 35.5x relative to 2022 and 32x relative to 2023 estimates

• At $389.70, we see 69% upside (18.3% p.a.) by end of 2026. Buy

Introduction

We review our Mastercard investment case 6 months after our last update. Since we last wrote about Mastercard in May, the share price has risen by another 4.4%, taking its rise in the past twelve months to 24%:

Mastercard Share Price (Last 1 Year)

Source: Google Finance (08-Nov-23).

We believe Mastercard remains a solid opportunity capable of delivering a high-teens annualized return. Volume, revenue and Adjusted EBIT have continued to grow at low-to-mid-teens year-on-year in recent quarters. Value-added services are still growing faster than overall revenues. Consumer spending remains resilient. The overall regulatory landscape is benign, and Mastercard is experimenting wit…