Mastercard: Where Will the Stock Be In 5 Years?

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

Summary

• Mastercard stock was up 9.1% on Friday, after strong Q4 results the day before showed how its multi-year structural growth has continued.

• Volumes rebounded strongly in Q4, with total volume up 31% and Cross-Border ex. Intra-Europe volume up 63% year-on-year.

• Mastercard volumes are now solidly above pre-COVID levels and, even with a still-incomplete recovery, Q4 EPS was 20% above 2019.

• Management targets a low 20s EPS CAGR in 2022-24, Fintech disruption fears are unfounded, and Omicron's impact is likely to be limited.

• With shares at $382.51, we expect shares to double to $790 in 5 years, including a total return of 80% (16.4% annualized) by 2024 year-end.

Introduction

Mastercard Inc. shares rose 9.1% on Friday (January 28), alongside a similar 10.6% rise in peer Visa Inc. shares. Both companies have reported Q4 CY21 results the day before, with Visa releasing their results aftermarket.

We initiated our Buy rating on Mastercard in April 2019. Since then MA stock has gained 64.3% in jus…