Analyst from Wall Street Predicts Mastercard Shares Could Reach $567. Should Investors Purchase?
Analyst from Wall Street Predicts Mastercard Shares Could Reach $567. Should Investors Purchase?
The top-performing stock in the financial sector this month is payment processing giant Mastercard (MA, down 0.64%). This isn't surprising given that its third-quarter earnings report, released on October 31, demonstrated strong growth and surpassed analyst predictions by a significant margin.
In light of Mastercard's impressive performance, one Wall Street analyst raised his price target for the company. So, is his optimism warranted?
Price Target Increase
Frankly speaking, TD Cowen's Bryan Bergin bumped up his 12-month price target for Mastercard to $567 per share, quite a jump from his previous prediction of $533 per share. He maintains his buy recommendation for the stock.
This adjustment in price target came shortly after Mastercard's annual investor day. Bergin believed the event underscored the company's robust and sustainable growth potential, which he predicts will result in double-digit growth in key metrics through 2027. He also applauded the various revenue streams Mastercard has identified, bolstering his ongoing bullish view of the company.
In his latest research note on Mastercard, Bergin stated that his new price target equates to approximately 30 times the company's estimated forward P/E for 2026.
Victory in the Battle
When it comes to the battle against cash, Mastercard is a major victor. Being the smaller of the two leading card brands (with Visa taking the top spot), Mastercard has thrived thanks to consumers' transition from cash transactions to more contemporary methods such as payment cards. This shift is far from over, ensuring Mastercard's continued growth, even at its current substantial size.
In the third quarter, Mastercard boosted its net revenue by 13% year over year, reaching $7.4 billion, while its non-GAAP (adjusted) net income climbed by nearly the same percentage, amounting to $3.6 billion. This yielded a staggering 49% profit margin. While the stock's valuations are a bit steep, the growth figures make it a worthwhile investment.
Bergin's optimism towards Mastercard extended to investing, as he advised buying the stock due to its projected double-digit growth and diverse revenue streams. Considering Mastercard's impressive financial performance and TD Cowen's price target increase to $567 per share, smart investors might consider allocating their finance into this stock for potential returns.