On Monday, Baird reiterated its Outperform rating on MasterCard stock, with a price target of $545.00. MasterCard's recent announcement regarding the pricing of new note issuances confirmed the rating.
The company has priced 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%.
The firm noted that MasterCard is a steady compounder and that the new notes could be utilized for various purposes. The options include general corporate needs, which could be slightly dilutive to earnings per share (EPS), or stock buybacks, which would likely have a neutral impact on EPS. According to the firm, if the funds are not allocated to a specific purpose, the dilution to annual EPS could be around $0.12, which is less than 1%.
The analyst from Baird pointed out that issuing these notes is relatively insignificant to MasterCard's annualized EPS. The move to issue these notes is part of MasterCard's broader financial strategy.
The company, listed on the New York Stock Exchange under the ticker NYSE:MA, continues to be favored by Baird for its consistent financial performance.
It is important to note that the details of the note issuance, including the amounts and the respective interest rates, were specified. The $750 million note is set to mature in 2028, the $1.15 billion note in 2032, and the $1.10 billion note in 2035. The interest rates for these notes are 4.10%, 4.35%, and 4.55%, respectively.
The firm's commentary provided insight into the potential impact of the new note issuance on MasterCard's financials. While the precise use of the proceeds from these notes has not been disclosed, the analysis suggests two likely scenarios, with either a negligible or neutral effect on the company's earnings per share.
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