On Wednesday, BMO Capital Markets maintained an Outperform rating on MasterCard shares and increased the price target to $520 from $510, reflecting confidence in the company's revenue growth. MasterCard has posted a solid quarter with double-digit revenue increases, dispelling investor concerns that arose after Visa (NYSE:V) reported slightly softer-than-expected results.
The payment network's revenue saw a 9% year-over-year growth on a foreign exchange-neutral basis, propelled by a substantial rise in cross-border fees, which surged 21% compared to the previous year. This growth has been a significant factor in the positive outlook for MasterCard.
In addition to the payment network's performance, the company's Value-Added Services (VAS) witnessed a robust 19% year-over-year increase, marking a sequential acceleration quarter over quarter. This growth remained strong even after adjusting for a slightly easier comparison with the prior year.
BMO Capital has reiterated a slight preference for MasterCard over its competitor Visa, citing the former's consistent revenue trajectory. Following the latest financial results, the firm has raised its forward earnings per share estimates by approximately 1%.
The new price target of $520 set by BMO Capital indicates a vote of confidence in MasterCard's continued financial performance and its ability to maintain a strong growth trajectory in the payments industry.
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