Piper Sandler initiated coverage of Visa (NYSE:V) and MasterCard (MA) with Overweight ratings on Monday, saying that the global payments leaders are benefitting from secular growth drivers.
Visa was assigned a $322 price target, while Mastercard (NYSE:MA) was given a target of $531 per share.
The investment firm labeled MasterCard and Visa as attractive businesses to own based on their scale, hard-to-replicate network, extensive FinTech ecosystem partnerships, and tethered to sustainable secular growth within digital payments.
Specifically, analysts believe Mastercard can sustain 12% or more revenue growth and mid-to-high teens EPS growth over the next three years, supported by multiple growth and margin drivers. "We are modeling operating margin expansion of 80bps for FY25," said Piper Sandler.
For Visa, analysts believe it can drive top-line/bottom-line margins of 11% or 12%.
"Further, we believe that MA and V's significant tech investments (across software, infrastructure, people), vast proprietary dataset, and ability (and willingness) to invest in GenAI could drive upside to fundamentals and thereby unlock value for the stock," adds the firm.
"In our view, embedded GenAI will likely be among the earlier use cases of a scaled enterprise solution."