Published on May 13, 2024, 1:42 pm

Title: Piper Sandler Initiates Coverage On Visa And Mastercard, Citing Strong Growth Potential

Piper Sandler recently initiated coverage on Visa Inc (V) and Mastercard Inc (MA) with Overweight ratings, underlining their strong positions within the global payments industry and their potential for sustained growth. Analyst Arvind Ramnani expressed confidence in both companies, highlighting their attractiveness as investment opportunities.

Ramnani pointed out that Visa and Mastercard have made significant tech investments, including in generative AI, which could potentially bolster their fundamentals. He anticipates that Mastercard is set to achieve 11.0% growth this year and revenue growth exceeding 12.7% by FY25. Additionally, he foresees mid-to-high teens EPS growth over the next three years for the company.

For Mastercard, several factors are expected to drive growth, such as robust Payment Network revenue expansion and the development of Value-added Services and Solutions. With an impressive annual transaction volume of $9 trillion and a total addressable market (TAM) surpassing $250 trillion, Mastercard is well-positioned to take advantage of the increasing shift away from cash transactions and capitalize on new service offerings and technologies.

Similarly, Ramnani believes that Visa can achieve revenue growth of 10.7%, along with top-line/bottom-line margins exceeding +11%/+12%. The growth drivers for Visa include its Data Processing, Services, and International segments. With an annual transaction volume around $15 trillion and a TAM exceeding $250 trillion, Visa is expected to experience growth driven by new flows, value-added services, international expansion, and partnerships within its extensive FinTech ecosystem.

Ramnani’s optimistic outlook on Visa and Mastercard emphasizes the potential for further growth and value creation in the global payments sector. Innovations like GenAI play a crucial role in driving industry evolution alongside strategic investments made by these companies into their operations.

In conclusion, Piper Sandler’s initiation of coverage highlights the promising future ahead for both Visa and Mastercard within the dynamic landscape of payment technology. By leveraging cutting-edge technologies like generative AI and strategically expanding their business horizons through innovative solutions, these companies are poised to unlock further value for investors while contributing to the ongoing evolution of digital payments globally.

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