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Mastercard: Consumer Strength & Travel Recovery Continued In Q2

Mastercard: Consumer Strength & Travel Recovery Continued In Q2

(Preview) Company Update (MA US) (Buy)

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Librarian Capital
Jul 30, 2022
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Librarian Capital's Research Library
Librarian Capital's Research Library
Mastercard: Consumer Strength & Travel Recovery Continued In Q2
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Summary

  • Q2 again saw consumer strength and Travel recovery for Mastercard; switched volume grew 26% and Travel volume grew 154%.

  • Mastercard revenue grew 21% year-on-year, despite currency and Russia-related headwinds, and EPS grew 32% year-on-year.

  • Management raised their full-year outlook; we believe this implies a 23% growth in EBIT this year, continuing a long-term mid-teens CAGR.

  • Mastercard shares are trading at 41x 2021 EPS, in line with our long-term assumption; on 2022 EPS, P/E is 34x.

  • With shares at $352.45, we expect an exit price of $644 and a total return of 86% (20.0% annualized) by 2025 year-end. Buy.

Introduction

Mastercard Inc. reported Q2 2022 results on Thursday (July 28), and shares closed up 2.7% that day.

We initiated our Buy rating on Mastercard in April 2019. Total gain since then currently stands at 39% after just over three years, though MA’s stock price has fallen 10% in the past year.

Q2 marked another great quarter for Mastercard. Consumer spending was strong, and cr…

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