Mastercard Benefits From the Global Shift to Card and Digital Payments
Because the firm derives about two-thirds of its revenue outside the US, the continued adoption in those markets bodes well for its revenue stream.
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* Mastercard gets a fresh Buy rating from TD Cowen
* We continue to favor its medium to longer-term international prospects
Earlier today we touched on some price target increases for Qualcomm QCOM, and to that we can add a new Buy rating for our shares of Mastercard MA from TD Cowen.
One of the rationales behind the firm’s rating is the company’s competitive moat when it comes to monetizing both card and non-card transactions. That is certainly a strong position enjoyed by the company as there is a globe shift to card and digital payments from cash and check.
Data collected by Worldpay puts the global use of cash at 16% of all point-of-sale transactions, which breaks down as follows:
* 15% in Asia Pacific
* 22% in Europe
* 31% in Latin America
* 43% in Africa and the Middle East
* 12% in North America
Because Mastercard derives roughly two-thirds of its revenue outside the US, meaningfully higher than Visa V or American Express AXP, the continued adoption in those markets bodes well for Mastercard’s revenue stream.
It also explains why Mastercard’s joint venture joint venture with NetsUnion Clearing, which is China’s national online transactions processor, received approval from the People’s Bank of China and the National Administration of Financial Regulation in late 2023.
As we wait for that effort to come on stream in the coming quarters, the market’s focus will remain on spending prospects, both consumer and corporate T&E. That means digging into next week’s March Retail Sales report. While we wait for that, you should mark your calendar for May 9, which is when Mastercard will pay its next quarterly dividend of $0.66 per share.
For now, our price target remains $490, but given the strength of the economy and return of real wage growth in the US, we will look for incremental upside to that target as retail sales data for the US, eurozone, and other key geographies are published.
At the time of publication, TheStreet Pro Portfolio was long MA, QCOM.
