Mastercard: Revenue Growth Resumed In Q1, 10%+ Annualized Return Ahead (Preview)

Company Update (MA US) (Buy)

Summary

• Mastercard returned to positive year-on-year revenue growth in Q1 2021, with volume up double-digits both globally and in the U.S.

• Volume recovery is accelerating and visible in March and April figures; there is significant pent-up demand in high-margin Travel.

• Mastercard continued to make strategic progress in value-add services, in winning customers and in building its "multi-rail" with M&A.

• Management outlook implies a 20% year-on-year EBIT recovery in Q2, and their comments point to continuing P&L recovery in H2.

• At $382.06, we expect an exit price of $554 and a total return of 48% (11.3% annualized) in just under 4 years. Buy.

Why is Mastercard Stock Down?

Mastercard released its Q1 2021 results last Thursday (April 29) morning, and shares have fallen by 3.4% in the subsequent two days.

We initiated our Buy rating on Mastercard stock in April 2019. Since then, Mastercard shares have gained 64% (including dividends) in 2 years, nearly 15 ppt ahead of the S&P 500, including up 7.2%…