MasterCard, Inc. (MA) continues to navigate market volatility and nip at the heels of the S&P 500. As of July 2022, MasterCard slid to a loss of approximately 8% compared to the S&P 500’s loss of about 7% over the past year. The company advanced on the WhaleWisdom Heatmap in the first quarter of 2022 to a rank of seven from twenty-five.
MasterCard is a technology company in the global payments industry. While known worldwide for its MasterCard credit card brand, the company offers payment solutions that include credit, debit, prepaid, commercial, and payment programs and solutions for consumers and merchants. MasterCard earns revenue primarily from fees paid by financial institutions and switched transaction fees covering authorization. The company earns income based on the number of transactions completed for financial institutions that issue their card and the dollar volume of transactions. During a challenging economic time of high inflation, consumer spending continues to rise, bringing steady revenue to MasterCard.
Hedge Funds Sell
Hedge funds were selling the stock in the first quarter of 2022, with the aggregate 13F shares held lowered to approximately 152.99 million from 153.01 million, a change of roughly 0.01%. Of the hedge funds, 45 created new positions, 183 added, 46 exited, and 193 reduced their stakes. Institutions sold and decreased their aggregate holdings by about 1.2% to approximately 726.1 million from 735.1 million.
Positive Earnings Estimates
Analysts expect to see earnings increase in 2022 and 2023, bringing earnings per share to $12.65 by December 2023, up from an estimated $10.52 for December 2022. Revenue estimates are also encouraging, with an anticipated rise to approximately $22.2 billion by December 2022 and an estimated revenue of about $25.9 billion by December 2023. The 13F metrics between 2012 and 2022 show that funds held remained reasonably steady, despite MasterCard’s more recent fluctuating stock price.
Analysts Pull Price Targets
Analysts have been lowering price targets on MasterCard’s stock. Analyst Darrin Peller of Wolfe Research, LLC lowered the firm’s price target on the stock to $415 from $465 and kept an Outperform rating. Wolfe described MasterCard as a resilient business and believes it started to benefit from inflation. JP Morgan analyst Tien-tsin Huang kept an Outperform rating on MasterCard’s stock and adjusted the firm’s price target to $425 from $430. Analyst David Koning from Baird Capital lowered the firm’s price target on MasterCard to $416 from $470.
Optimistic Outlook Beyond 2022
MasterCard’s 2023 revenue and earnings estimates are encouraging after a rocky performance period to date in 2022. Analysts have lowered price targets, though indications are that the stock will rebound. MasterCard may be an opportunity best suited for patient investors.