To The Moon

$MasterCard(MA)$ is expected to report its fourth quarter earnings result on 30 Jan 2025 before the market open.

Market is expecting revenues to amount to $7.38 billion, exhibiting an increase of 12.8% compared to the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level. Earnings per share is anticipated to come in at $3.69 per share which is an increase of 15.7% over the same period last year.

MasterCard (MA) Previous Earnings Call Positive Sentiment With Only 6.99% Gain Since

MasterCard has grow only 6.99% since its last earnings call on 31 October 2024, though the sentiment is positive. The earnings call presented a strong financial performance with notable growth in net revenues, cross-border volumes, and value-added services. Strategic acquisitions and expansions in digital acceptance were highlighted. However, upcoming tax rate increases and challenges in China were noted as concerns.

MasterCard (MA) Fourth Quarter Guidance To Be Lacklustre Compared To Previous

During Mastercard's third quarter 2024 earnings call, the company reported a 14% increase in net revenues and a 13% increase in adjusted net income compared to the previous year, all on a non-GAAP currency-neutral basis. These strong results were supported by a 17% year-over-year growth in cross-border volumes and a 19% increase in Value-Added Services & Solutions net revenue.

Operating expenses grew by 12%, while operating income rose by 15%. In terms of payment metrics, gross dollar volume (GDV) increased by 10%, with the U.S. seeing a 7% rise and international markets experiencing a 12% increase.

Switched transactions grew by 11%, and Mastercard's card growth stood at 6%, with 3.4 billion Mastercard and Maestro-branded cards issued globally. Mastercard also highlighted its strategic initiatives, including the acquisition of Recorded Future and Minna Technologies, and its focus on expanding acceptance, especially in digital and contactless payments.

For the upcoming fourth quarter, Mastercard anticipates net revenue growth in the low teens range, driven by continued consumer spending and demand for its services.

Factors Contributing To MA Strong Results In Third Quarter And Challenges That Might Come

Strong Financial Performance

Net revenues were up 14% year-over-year, and adjusted net income increased by 13% on a non-GAAP currency-neutral basis. EPS was $3.89, reflecting a 16% increase primarily due to strong operating income growth.

Due to the new Pillar 2 global minimum tax rules, starting in 2025, there will be an offset to the benefit of the incentive grant in Singapore, which previously reduced the tax rate by approximately 4%.

This might see MasterCard having part of the income reduced its operating income growth from Singapore.

Cross-Border Volume Growth

Cross-border volumes increased by 17% globally, indicating strong growth in both travel and non-travel related spending.

Value-Added Services Growth

Value-Added Services & Solutions net revenue grew by 19% year-over-year, driven by strong demand for consulting, marketing services, and identity and authentication solutions.

Strategic Acquisitions

Announcement of planned acquisitions of Recorded Future and Minna Technologies to enhance threat intelligence capabilities and subscription management services.

Expansion of Digital Acceptance

Mastercard's Tap-on-Phone is now live in over 110 markets, with locations almost doubling since the beginning of the year.

Despite going live in China, Mastercard faces challenges in building acceptance and achieving full integration into the domestic market.

MasterCard (MA) Price Target

Based on 25 Wall Street analysts offering 12 month price targets for Mastercard in the last 3 months. The average price target is $592.25 with a high forecast of $654.00 and a low forecast of $532.00. The average price target represents a 7.92% change from the last price of $548.80.

I am expecting MasterCard share price to trade range-bound as the net revenue might not come in as strong as the previous third quarter.

Technical Analysis - Multi-timeframe (MTF)

We saw MA having a very nice gap up on 27 Jan 2025 which is after trading sideways for some time, but the positive thing is MA is trading above the short-term MA, and this show that the bulls are in control.

With a bullish MACD upside movement and also MTF giving a strong uptrend signal, MA looks to continue trading higher, though we might see MA trading range-bound before and after its earnings.

I would not expect a big move after MA earnings.

Summary

MA might faced a lower net operating income with tax incentive cut in Singapore, but its net revenue might also slowed down, we would not be expecting the same high level as in third quarter.

Appreciate if you could share your thoughts in the comment section whether you think MA would post a lower net revenue.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.