Credit card giants Visa (V) and Mastercard (MA) are set to report their earnings results this week. Wall Street expects an EPS of $2.85 on revenue of $9.85 billion for Visa on July 29. For Mastercard, analysts expect earnings per share to come in at $4.03 on revenue of $7.93 billion on July 31. This equates to 17.8% and 12.3% year-over-year increases in earnings, respectively. It’s worth noting that both companies have a long streak of beating earnings.
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And there are reasons to believe that this winning streak could continue. Indeed, Wells Fargo is optimistic about Visa (V) and Mastercard (MA) heading into earnings. The analysts, led by five-star-rated Donald Fandetti, believe that the recent worries about stablecoins hurting these payment networks are “way overblown.” They also expect both companies to slightly beat revenue and EPS estimates this quarter. Because of this outlook, Wells Fargo continues to rate the stocks as Buys, with price targets for Visa and Mastercard of $395 and $625 per share, respectively.
Separately, Barclays, led by Ramsey El Assal, shares a similar positive outlook. In fact, it pointed to Bank of America’s (BAC) second-quarter results as a sign of strong consumer spending. According to the bank’s data, card volumes remain healthy, which is unsurprising given that the number of cards for both companies has been steadily increasing over the past five years, as shown in the image below from Main Street Data. As a result, this indicates that Visa and Mastercard, along with other merchant processors that benefit from transaction activity, will continue to grow.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. Indeed, the at-the-money straddle for MA suggests that options traders expect a 3.5% price move in either direction. This estimate is derived from the $567.50 strike price, with call options priced at $10.50 and put options at $9.25.
For Visa, options traders expect a 3.3% move based on calls and puts valued at $6.20 and $5.68, respectively, at the $355 strike price.
Which Stock Is Better, V or MA?
Turning to Wall Street, analysts think that MA stock has more room to run than V. In fact, MA’s price target of $630.71 per share implies almost 11% upside versus Visa’s 9.8%.
