Mastercard Inc. (NYSE:MA) could benefit from resilient consumer spending, accelerating international transactions and strong demand for cybersecurity services, according to JPMorgan analysts, who see a favorable setup ahead of the payments giant’s third-quarter earnings Thursday.
On Tuesday, JPMorgan analyst Tien-tsin Huang maintained an Overweight rating on Mastercard. The analyst said Visa Inc. (NYSE:V) fourth-quarter results offered encouraging signals for Mastercard, despite a slightly negative after-hours market reaction to Visa’s report.
JPMorgan believes Visa’s challenges, particularly higher client incentives and operating expense growth, may be company-specific rather than signs of broader weakness in the payments industry.
Strong Consumer Spending Supports Mastercard
Visa reported 10% growth in U.S. domestic purchase volume, while cross-border transaction volume increased 14% on a constant-currency basis, accelerating 1 percentage point sequentially.
The international spending acceleration was particularly encouraging because JPMorgan and Wall Street had anticipated a 1-percentage-point slowdown in Mastercard’s cross-border volume growth.
Visa’s global purchase volume also increased 10%, while revenue grew 12% organically on a constant-currency basis.
JPMorgan expects Mastercard’s third-quarter revenue growth to remain stable sequentially, although historical earnings trends suggest potential upside.
Both payment networks have historically reported revenue growth roughly 2 percentage points above consensus estimates, according to the firm.
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Cybersecurity Business Offers Another Growth Catalyst
Visa’s value-added services revenue increased 31% on a constant-currency basis, supported by demand for security and cybersecurity solutions.
JPMorgan estimates that security-related offerings account for more than 40% of Mastercard’s value-added services revenue, positioning the company to benefit from similar demand trends.
The firm also expects Mastercard to face less pressure from customer incentives than Visa.
About 25% of Visa’s payment volume is subject to contract renewals in fiscal 2026, compared with approximately 20% for Mastercard, according to JPMorgan.
That difference could help Mastercard avoid some of the incentive-related pressures affecting its larger rival.
JPMorgan Sees Favorable Earnings Setup
Despite its constructive outlook, JPMorgan cautioned that Mastercard could have limited revenue upside if its growth trends closely mirror Visa’s results.
The firm also noted that Mastercard’s historical organic revenue growth advantage of roughly 2 percentage points over Visa has narrowed in recent quarters.
Still, JPMorgan sees a mildly positive risk-reward profile heading into Thursday’s earnings report, supported by healthy spending trends and potentially fewer company-specific headwinds.
The analysts believe Mastercard shares could respond positively to Visa’s results as investors distinguish broader industry strength from challenges specific to Visa.
Mastercard Earnings and Analyst Outlook
Mastercard is preparing to report third-quarter earnings Thursday, Oct. 29.
Analysts expect earnings of $5.16 per share, up from $4.38 a year earlier. Revenue is projected to reach $9.65 billion, compared with $8.60 billion in the year-ago quarter.
The stock carries a consensus Buy rating, with an average price forecast of $674.73. Recent analyst actions include:
- Truist Securities maintained a Buy rating and raised its price forecast to $674 on Oct. 23.
- Baird maintained an Outperform rating and raised its price forecast to $710 on Oct. 9.
- RBC Capital Markets maintained an Outperform rating and raised its price forecast to $696 on Aug. 31.
Price Action
Price Action: Mastercard shares were up 0.51% at $612.99 and Visa shares were up 0.09% at $402.23 at the time of publication on Wednesday, according to Benzinga Pro data.
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