Mastercard (MA) delivered solid second-quarter results, topping revenue and earnings estimates. The impressive results can be attributed to the payment processor benefiting from increased domestic and cross-border spending.
Net revenue increased 36% year-over-year to $4.5 billion, beating consensus estimates of $4.33 billion. The increase came on the back of 58% growth in cross-border volume and 41% growth in switched transactions.
Adjusted diluted earnings per share were up 43% from the same quarter last year to $1.95, beating consensus estimates of $1.72 a share. Amid the revenues and earnings beat CEO, Michael Miebach remains optimistic of a recovery in international travel driving additional growth.
Miebach stated, “We continue to focus on diversifying our business and investing for sustained long-term growth. With the closing of the Ekata acquisition, we are excited to have advanced our digital identity capabilities and value delivered to our customers.”
Mastercard repurchased 4.6 million shares for $1.7 billion during the quarter and paid out dividends worth $434 million. (See Mastercard stock charts on TipRanks)
Yesterday, Mizuho Securities analyst Dan Dolev affirmed a Buy rating on the stock with a $435 price target, implying 11.88% upside potential to current levels. According to the analyst, Mastercard’s Q2 results appear clean and should be received well given that strong trends internationally, backed by ample cross-border travel recovery, offset the deceleration in the non-travel cross-border business.
“Our work points to accelerating card penetration and a boost to US volume growth. We believe the long-term stability and MA’s best-in-class terminal margins (along with V) should merit a mid-teens revenue multiple,” Dolev wrote in a research note to investors.
Consensus among analysts is a Strong Buy based on 9 Buys. The average Mastercard price target of $441.25 implies 13.49% upside potential to current levels.
MA scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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