Mastercard: Still Attractive Despite Recent 52-Week High

Company Update (MA US) (Buy)

Highlights

• Shares still attractive at 34.5x P/E due to strong EPS growth

• Multiple growth engines will likely power a 15%+ EPS CAGR

• EBIT grew 13% in Q1 and will likely grow 13% in 2023 (in $)

• Supposed structural risks like FedNow are nothing to fear

• At $373.75, we see 55% upside (18.5% p.a.) by end of 2025. Buy

Introduction

We review our Buy rating on Mastercard after shares closed at a new 52-week high last Thursday (May 18), and having examined comments by the company’s CEO and CFO at investor conferences in the past week.

Mastercard shares continue to be attractive, and offer the potential of a high-teens annualized return by 2025 year-end. Earnings growth is the main driver of expected returns, and is powered by multiple engines including still-rising penetration in consumer spend, new flows and value-add services. At $373.75, shares are at 34.5x 2022 EPS, which represented a modestly incomplete recovery from COVID-19. Q1 2023 saw EBIT grew by 17% excluding currency year-on-year, and full-…