Oppenheimer analysts upgraded Mastercard (NYSE:MA) stock from Perform to Outperform, setting a target of $510.
The price target is representing approximately 21% potential upside. MA shares rose 0.9% in pre-market and are indicated to open at a fresh record high.
While there are risks to the 2024/2025 consensus EPS estimates due to MA's expected downshift in run-rate EPS growth to the mid to high-teens, the current NTM P/E multiple is around 30x compared to its COVID high of ~44.5x, according to analysts.
Despite the challenges, MA's pre-COVID growth algorithm remains intact, with service growth driving 48% of net revenue growth.
Even in the face of depressed consumer spending, the company could achieve over 11% EPS growth, leveraging expense cuts, countering declining revenue, and increasing buybacks.
“Since its 2023 October low, MA has performed roughly in line with the S&P500 and we recommend buying quality to start 2024 vs. chasing high-flying Fintech stocks at current valuations. We're incrementally positive on payments after its years of underperformance,” analysts said.