Analyst downgrades MasterCard stock
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- October
- 10
The business outlook at MasterCard Inc. provides a good window into the mood of consumers who use its branded credit and debit cards billions of times each year to purchase everything from clothing to groceries to movie tickets.
So with consumers in a lousy mood, and showing signs of cutting back on their spending in a weakening U.S. economy hobbled by a poor housing market, a plummeting stock market and rising joblessness, there has been growing concern among investors that slower consumer purchases would hurt profits at Purchase-based MasterCard.
Those worries gained additional traction today when Deutsche Bank analyst Christopher Mammone cut his rating on MasterCard’s stock to a “hold†from a “buy.â€
“We believe the biggest risk to (earnings) guidance is onset of a global recession and implications for the consumer,†Mammone wrote in a research report.
Mammone said that MasterCard’s revenue growth could slow to 9 percent in 2009, down from MasterCard’s projections of 12 to 15 percent. In addition, growth in gross dollar card volumes could slow to 4 percent, down from previous estimates of 12 percent, according to the report.
The turmoil in the financial sector that has seen several banks fail or be absorbed by bigger banks also could lead to “ongoing dislocation in the payments system…that may alter the net balance of transaction/dollar volumes, in our view,†Mammone wrote.
After several years of outperforming the broader market, MasterCard’s stock has been under pressure since hitting a 52-week high of $320 on May 30. The shares fell $14.45 to $141.25 in early trading this afternoon on the New York Stock Exchange.
Mammone cut his price target on MasterCard stock to $200 from $350. He also slashed his earnings estimates and price target for rival Visa Inc.
This entry was posted
on Friday, October 10th, 2008 at 1:33 pm by Jay Loomis.
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