Mastercard: Volume Now 30% Above 2019, Strong Earnings Rebound To Come (Preview)

Company Update (MA US) (Buy)

Summary

• Mastercard's total volume was 30% above the 2019 level in the first 3 weeks of July, after being at 27% higher in Q2 and 21% higher in Q4.

• There was a spike in cryptocurrencies in from April to May; excluding this, the recovery in cross-border volume has been steady.

• Q2 revenues were 10% higher than in 2019, even with high-margin non-intra-Europe cross-border volume still at 79%; EPS was 3% higher.

• Shares are trading at 48.3x 2019 earnings, but we expect earnings to quickly rebound above that after COVID travel restrictions end.

• With shares at $385.94, we expect a total return of 50% (12.7% annualized) by end of 2024. Shares will likely exceed $650 in 2025. Buy.

Introduction

We review our Mastercard Incorporated (MA) investment case after Q2 2021 results were released on Thursday (July 29).

We initiated our Buy rating on Mastercard stock in April 2019. Since then shares have gained 65% in just under 2.5 years, about 10 ppt ahead of the S&P 500, including 8.3% in 2021 year-to-date.

Mast…