Following a strong day for both of the credit card processors (Visa up +2.51% on Wednesday, Mastercard up +3.87%), Barclays reiterated the view that the companies are in an ideal position to see growth in the new year. Though the firms saw tremendous share appreciation in 2012 (V up +32%, MA up +49%), the analysts still believe that the credit card companies can maintain growth because of positive risk/reward profiles plus strong EPS growth that is expected.
In the short term, Barclays views Visa as the stronger play due to its favorable revenue, product, and geographic reach. However, in the long term Mastercard has a stronger opportunity to perform well due to geographic and margin expansion.
The analysts rate both Visa and Mastercard as “Overweight.” The firm increased the price target of Visa from $155 to $170, a +9.4% upside to Wednesday’s closing price of $155.38. Meanwhile, Barclays boosted Mastercard’s price target from $505 to $575, a +12.7% percent upside to Wednesday’s closing price of $510.27.
Visa shares were down 58 cents, or -0.37%, in premarket trading on Thursday, while Mastercard shares were down 27 cents, or -0.05%.
The Bottom Line
Shares of Visa (V) have a .85% dividend yield, based on last night’s closing stock price of $155.38. The stock has technical support in the $146-$150 price area. The shares are trading near all-time highs. Shares of Mastercard (MA) have a .24% dividend yield, based on last night’s closing stock price of $480-$489 price area. The shares are trading near all-time highs.
Visa Inc (V) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Mastercard Inc (MA) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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