Goldman Sachs Finds Mastercard Shining In 2024 Despite Weak Industry Outlook

Zinger Key Points
  • Goldman Sachs raises Mastercard's target to $482, maintains Buy, despite anticipated global card volume deceleration.

Goldman Sachs analyst raised the price target for Mastercard Inc MA to $482 (from $433) and maintained a Buy rating.

The analyst expects a mixed outlook for overall credit card spending and anticipates card volume growth to decelerate globally and domestically by ~70bps and ~100bps, respectively, due to softening inflation, slower GDP growth, and tightening consumer belts.

However, the analyst expects consistent spending trends in 2024 as in H2 FY23.

Also ReadDid Your Holiday Shopping Follow National Trend? Mastercard's Data Shows Online Sales Surge And In-Store Rise

The analyst sees uncertainty related to average ticket sizes, which have underperformed despite continued elevated inflation (U.S. ticket sizes declined 1%-2% in H2 FY23) even after adjusting for gas prices, and can be attributed to consumer behavioral shifts in response to higher prices.

Consequently, the analyst expects U.S. volume growth of ~8% (vs ~6% in H2 2023) in 2024 but projects intermediate-term growth in U.S. card volumes in the 6%-8% range and the ~8%-10% range globally.

The analyst expects MA to guide to high teens EPS growth in 2024. In particular, the analyst estimates EPS in the range of $14.14-$14.20 vs. consensus of $14.23 for FY24.

Also ReadCredit Card Juggernaut Mastercard's Bold Financial Play: Dividend Hike & Massive Buyback

Price Action: MA shares are trading lower by 0.26% at $427.16 on the last check Thursday.

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