Morgan Stanley sees small MasterCard EPS impact from Discover-Capital One deal

Morgan Stanley keeps an Overweight rating and $536 price target on MasterCard (MA) following Capital One (COF) announcing a definitive agreement to acquire Discover Financial Services (DFS). Capital One’s existing debit portfolio is primarily Mastercard-branded, and assuming debit volumes of about $100B, this would represent about 1.4% of Mastercard’s global total payment volumes to be moved, the analyst tells investors in a research note. Assuming Capital One were to decide to move $75B of its credit card volumes to the Discover network, the firm estimates that this would be a 20bps impact to Visa’s (V) global payment volumes and an additional 70 bps to Mastercard, Morgan Stanley added.