Zacks Investment Research upgraded MasterCard Inc. (MA - Analyst Report) to a Zacks Rank #2 (Buy) on Sep 28, 2016.
Why the Upgrade?
Market sentiments have been favoring MasterCard following a slew of positive developments, including a partnership with PayPal, the acquisition of VocaLink, and an upgrade in Masterpass.
Earlier this month, MasterCard and PayPal Holdings Inc. (PYPL - Snapshot Report) announced an extension of their long-standing partnership. Per the deal, PayPal will make MasterCard a "clear and equal" payment choice in its wallet. The card will be shown as a default payment method, making it easily identifiable to customers while transacting. PayPal will use MasterCard’s tokenization service, which swaps cardholder information such as account numbers with a unique set of numbers that validates a customer’s identity to discourage online data theft. The partnership will give MasterCard greater prominence in online transactions, by funneling more transactions through its network. It will save MasterCard from loss of transaction fee that the company used to incur when PayPal users link their digital wallets to their bank accounts. The agreement should result in more spending volume on MasterCard cards. Merchants will also benefit from improved customer experience, efficiency and security, which together should drive sales.
In July, the company also announced that it will acquire 92.4% of VocaLink, a leading provider of Automated Clearing House (ACH) electronic payments’ services in the United Kingdom. This acquisition will strengthen the company’s position in the U.K. payments market.
MASTERCARD INC Price and Consensus
Moreover, MasterCard recently launched a new version of MasterPass that makes it the first and only network to deliver an omni-channel, all-digital payment service for card issuers, merchants and consumers.
On the back of these developments the company has seen an increase in its earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for MasterCard increased by 1.4% to $3.64 per share for 2016 and by 1.2% to $4.22 per share for 2017.
Other equally ranked stocks in this space are Equifax Inc. (EFX - Analyst Report) and Evertec Inc. (EVTC - Snapshot Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
Equifax Inc. saw a 2.7% rise in its 2016 Zacks Consensus Estimate to $5.30 earnings per share over the past 60 days. On average, the company delivered a positive earnings surprise of 4.4% in the last four quarters.
Evertec Inc. saw a 1.2% rise in its Zacks Consensus Estimate for 2016 to $1.66 earnings per share over the past 60 days. The company consistently surpassed expectations in the last four quarters, with an average beat of 1.22%.
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