Financial services major Mastercard Inc. (NYSE: MA) recently announced that the company has partnered with a modern banking technology company, Zeta, to jointly launch credit cards with issuers worldwide on Zeta’s modern, cloud-native and fully API-ready credit processing stack.
However, following the news, shares of Mastercard declined over 5.5% to close at $312.50 in Monday’s extended trading session.
Strategic Impact
The five-year global partnership, marked by a financial investment by Mastercard in Zeta, is aimed at simplifying the credit card processing industry from complexities like fragmented and multi-vendor systems to easy and efficient single-vendor systems.
This is to be achieved by combining Mastercard’s global reach and capabilities in digital issuance, fraud and risk, and loyalty solutions and Zeta’s Tachyon Credit system, which is the sole modern credit processing stack that offers an integrated credit and loan processing platform in the industry.
Management Commentary
The Executive Vice-President, Products & Innovation, Asia Pacific of Mastercard, Sandeep Malhotra, said, “As people shop and bank online more than ever before, Mastercard is partnering with Zeta to provide issuing banks and fintech innovators with modern credit card processing capabilities at scale that will maximize the safety, security and convenience of e-commerce, online banking, and contactless transactions. By deploying Zeta’s credit processing stack, issuers will have an opportunity to grow their user base, drive higher usage and enter new geographical markets, all while accelerating the cashless revolution around the world.”
Price Target
Recently, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on the stock. The analyst, however, raised the price target from $460 to $472, which implies upside potential of 50.8% from current levels.
According to the analyst, the company remains well-positioned to benefit from the behavioral shift towards electronic and other new payment technologies. Further, the company is expected to benefit from the rise in consumer spending.
Consensus among analysts is a Strong Buy based on 13 unanimous Buys. The average Mastercard price target of $431.23 implies upside potential of 37.8% from current levels. Shares have declined 15.7% over the past year.
News Sentiment
News Sentiment for MA is Neutral based on 73 articles over the past seven days. 50% of the articles have Bullish sentiment, compared to a sector average of 63%.
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