PURCHASE, N.Y. - Mastercard (NYSE:MA) has announced its intent to purchase Recorded Future, a leader in global threat intelligence, for $2.65 billion. The acquisition is set to enhance Mastercard's cybersecurity capabilities, extending beyond the payments ecosystem.
Recorded Future serves an extensive client base, including 45 governments and over half of the Fortune 100 companies, operating in 75 countries. The company specializes in providing real-time threat analysis by leveraging a broad dataset, AI, and other advanced technologies. This acquisition is expected to strengthen Mastercard's existing suite of identity verification, fraud prevention, and cybersecurity services.
The collaboration between the two companies has already yielded an AI-driven service that improves the detection of compromised credit cards. Since its introduction earlier this year, the service has reportedly doubled the identification rate of such cards compared to the previous year.
Craig Vosburg, Chief Services Officer at Mastercard, emphasized the importance of trust and the role of the acquisition in delivering peace of mind throughout the transaction process. Christopher Ahlberg, CEO of Recorded Future, expressed his company's commitment to securing the world with intelligence and saw the union with Mastercard as an opportunity to expand their impact.
The deal, which is subject to regulatory review and customary closing conditions, is expected to be finalized by the first quarter of 2025.
Mastercard, a global technology company in the payments industry, aims to foster an inclusive digital economy with its secure solutions. Recorded Future's addition promises to offer enhanced insights and product innovations to Mastercard's global clientele, while also providing Recorded Future with growth opportunities.
This strategic move comes at a time when cybercrime costs are projected to reach $9.2 trillion globally in 2024, highlighting the critical need for robust cyber defenses in an increasingly digital world.
The information for this report is based on a press release statement.
In other recent news, Goldman Sachs is reportedly preparing to transfer its General Motors (NYSE:GM) credit card business to Barclays, a move that aligns with its strategy to streamline consumer services. The transition involves about $2 billion in outstanding balances and is expected to impact Goldman Sachs' revenue in the third quarter. The CEO, David Solomon, anticipates a pretax impact of roughly $400 million due to this move.
Meanwhile, MasterCard, which has been rated Outperform by Baird, has priced new note issuances, including a $750 million note due in 2028 at 4.10%, a $1.15 billion note due in 2032 at 4.35%, and a $1.10 billion note due in 2035 at 4.55%. Baird maintains that these issuances will have a negligible or neutral effect on the company's earnings per share.
In addition, MasterCard has received a Neutral rating from Compass Point, which projects a slightly less optimistic view on the company's margin expansion. The firm set a price target of $525 based on a forward price-to-earnings multiple of 32.0x, applied to their forecasted 2025 fiscal year earnings of $16.41 per share.
BMO Capital Markets, on the other hand, reiterated an Outperform rating on MasterCard with a price target of $520.00. The firm's confidence is based on MasterCard's unique offerings within the Value-Added Services segment and its potential to gain market share.
Lastly, Piper Sandler increased its price target on MasterCard shares to $536 from $531, maintaining an Overweight rating. The firm noted MasterCard's second-quarter earnings, which slightly exceeded Wall Street's expectations, and a 19% increase in Value-Added Services. These are some of the recent developments that investors should take into account.
InvestingPro Insights
As Mastercard sets its sights on bolstering its cybersecurity capabilities with the acquisition of Recorded Future, it's essential for investors to consider the financial health and market performance of the company. According to InvestingPro data, Mastercard boasts a substantial market capitalization of $451 billion, underscoring its significant presence in the financial services industry. The company's commitment to shareholder returns is evident, with a notable dividend growth of 15.79% over the last twelve months as of Q2 2024 and consistent dividend payments for 19 consecutive years, a testament to its financial stability and investor-friendly approach.
InvestingPro Tips highlight Mastercard's prominent role in the financial services sector and its ability to sufficiently cover interest payments with its cash flows, which is crucial for maintaining its investment-grade credit rating and ensuring long-term financial health. However, analysts have tempered their expectations, with 12 analysts revising their earnings downwards for the upcoming period. This could be a point of consideration for investors looking at near-term performance.
Notably, Mastercard is trading at a high earnings multiple, with a P/E ratio of 37.11, and a slightly lower adjusted P/E ratio of 35.56 for the last twelve months as of Q2 2024. This indicates that the stock may be priced at a premium relative to its near-term earnings growth. Additionally, the company is trading near its 52-week high, at 99.63% of the peak price, reflecting strong market confidence in its prospects.
For investors seeking comprehensive analysis and additional insights, InvestingPro offers a wealth of information, including more tips that can help in making informed investment decisions. Currently, there are 11 additional InvestingPro Tips available for Mastercard at https://www.investing.com/pro/MA, providing a deeper dive into the company's performance and potential.
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