Mastercard: Strong Q3 Results Even As Stock Fell 17% Since Summer

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

Summary

• Mastercard stock continued falling after strong Q3 results, taking its loss this week to 7.2%; it has now fallen 17% from its 52-week peak.

• Total volume reached more than 30% above 2019, though high-margin Cross-Border Volume (ex. intra-Europe) was still 17% below.

• Even with an incomplete travel recovery, revenues reached 11.6% above 2019 and EPS reached 9.9% above 2019. Q4 outlook was strong.

• Mastercard shares are trading at 41.5x 2019 earnings; Q4 2021 Net Income was 7% above 2019, which would imply a 38.8x P/E.

• With shares at $333.03, we expect an exit price of $576 and a total return of 77% (19.8% annualized) by 2024 year-end. Buy.

Introduction: Why is Mastercard Stock Down?

We review our Mastercard investment case after the company released Q3 2021 results on Thursday (October 28).

Mastercard stock fell 0.8% on Thursday, extending its decline this week to 7.2%; close peer Visa fell 2.8% on Thursday, extending its decline this week to 9.3%. Both stocks are now down year-to-date (b…