7. Mastercard Incorporated (NYSE:MA)
Upside Potential as of January 9: 9.83%
As the second-largest payment processor in the world, Mastercard Incorporated (NYSE:MA), one of the Best Financial Stocks, handled almost $9 trillion in transactions in 2023. The company thrives at digital and cross-border payments, maintains strong operating margins, and gains from more travel. The company operates in more than 200 countries and handles transactions in more than 150 currencies.
Despite market challenges and inflation, the company continues to show robust growth and profitability. Mastercard Incorporated (NYSE:MA) is poised for future growth because of its strategic and innovative investments, despite the risks of competition and regulatory scrutiny.
The sustainability of Mastercard Incorporated (NYSE:MA) is seen in its most recent financial outcomes. Revenue increased 13% year over year in Q3 of 2024 due to strong consumer spending and improved global macroeconomic conditions. Travel-related and overall spending is still growing, as seen by the 10% YoY growth in gross dollar volume and the 17% YoY increase in cross-border volumes. Operating margins rose to 59.3%, which led to a 16% increase in EPS, while revenue from value-added services grew by 18%, surpassing overall growth. The company’s $12 billion authorization for a new share buyback and its $12 billion yearly free cash flow prove that it continues to deliver outstanding returns to shareholders. Cash flow from operations grew by 58.86% year over year.
Trevor Williams, a Jefferies analyst, maintained his Buy recommendation on Mastercard Incorporated (NYSE:MA) shares and increased the price objective from $590 to $610. Investors are informed by the analyst that, based on the firm’s assessment of the underlying drivers in FY25, no more pricing would be required in 2025 for the company to achieve 12% growth in organic transaction processing fees, and just 50 points of additional pricing would be required to achieve 13% growth.
The 24 analysts with 12-month price targets for Mastercard Incorporated (NYSE:MA) stock have an average target of $567.17, with a low estimate of $482 and a high estimate of $654. The current stock price of $516.40 is expected to rise 9.83%, according to the average objective.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the firm among the funds in Insider Monkey’s database. It owns 4.12 million shares worth $2.03 billion as of Q3. Qualivian Investment Partners stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q3 2024 investor letter:
“Mastercard Incorporated (NYSE:MA): Q2 2024 revenues and EPS beat consensus expectations, growing 11% (+13% on a constant currency, CC, basis) and 24% (+27% on a CC basis) respectively. Overall payments volume increased 9%, with highly profitable cross-border volumes growing 17%. Management qualified their expectations for a solid FY2024 anchored around continued stable consumer spending, while noting there is uncertainty regarding the overall macroeconomic backdrop heading into the back half of 2024 and 2025. In the event of a weakening consumer, management noted they would adjust investment priorities as well as the company’s cost structure as appropriate if trends softened further. We continue to expect that over the longer term, MA will continue to drive and benefit from the digitization of payments globally.”