MA

Q4/2024 earnings by credit-card processors like MasterCard (MA) and Visa (V) seem to have got lost among the clutter of big tech names' announcements. Meanwhile, shares of both well-known payment service providers don't stop breaking impressive price records.

Evolving landscape of digital transactions railroaded MasterCard into a climbing pathway to conquer a new height at nearly $577 before the end of January, compared to passing $450+ levels during the same period only one year ago. A short pullback to $500 rather reflected a post-Christmas hangover mood, followed by massive buying those dips on upbeating growth expectations, brilliantly confirmed last week. On January 30, earnings call transcript pointed at MasterCard's net revenue increase by 16% YoY, with cross-border volume surging 20% globally and worldwide gross dollar payments adding 12%. The company's quarterly profit per share was $3.82, which was roughly 3% better than consensus estimates around $3.70, giving a 20% surplus against $3.18 in Q4 2023 and a 44% boost in two years vs $2.64 in Q4 2022.

The company itself estimated its future revenue growth at "high end of low double digits to low teens" range in 2025, with a 2% foreign exchange headwind. Average projections of analyst pools on Wall Street are robust at $13.91 and $15.71 for the equity per share within the nearest two financial years, with many investment bank ratings being positively updated. As an example, Citigroup raised its outlook on MasterCard, setting its price target to as high as $650 from their previous goal at $584. This means a bet for at least 12% of additional bullish shift to outperform the bank's forecast for the S&P 500 broad barometer. We would expect 15% or higher growth for shares of payment systems in 2025, when taking into consideration our target of 6,850 for the S&P 500.

MasterCard's stock buybacks reached $3.4 billion in Q4. It also launched the so-called 2030 initiative for innovative products to expand its Value-Added Services (VAS) segment as a key driver of further growth. Recent acquisitions such as Recorded Future, high cash markets such as Africa and opportunities in the fintech space like data and analytics are supposed to help in reaching the goals, as it makes MasterCard less dependent on cyclical money streams. The company's traditional values are here combined with more steps into a cutting-edge and competitive fintech environment. According to Michael Miebach, CEO at MasterCard, "consumers remain engaged", with affluent consumers having benefited from the wealth effect and the mass segment remaining "supported by the labor market". He added the company's own investigations proposed a year of global economic expansion in 2025 despite geopolitical concerns but MasterCard is "hyper focused on successfully executing on what we can control... our strategic priorities".

A solid brand recognition along the "Priceless Experience" concept where there are some things money can't buy, but for everything else, there's Mastercard, now calls on pop culture fans to celebrate for dancing the choreography from the video for Abracadabra, the latest single from global icon Lady Gaga's album MAYHEM, scheduled on March 7. Using people's passion for music and dance is another valid point, MasterCard tried to offer special access to connect them to their favourite artist in ways that go beyond the stage. Fans are invited to "recreate the show-stopping dance moves for the opportunity to win Priceless prizes, including tickets to Lady Gaga's Club MAYHEM dance party with the Mistress herself". To win the "once-in-a-lifetime" chance of appearing a special edition of the Abracadabra (Fan Version) music video and a trip to Lady Gaga's club party, folks are sharing their dances on TikTok, Instagram and other select platforms with #MastercardGagaContest. What is important, no purchase or other financial condition is needed to win an experience, which is fully skill-based. Of course, this is a part of the advertising project, originally launched in 1997, when several products or services are listed before uttering the main and always intangible concept, which is referred as "priceless", or the thing money can't buy, before the announcer reads the slogan. And Mastercard had registered Priceless as a trademark long ago.

Visa (V) shows +14% for equity per share and +10% for revenue YoY, and its shares are breaking records as well and even ahead of MasterCard (MA), and so the latter will highly likely not only catch up, but also move faster to accelerate the trend during the next 5-8 months.