Mastercard: Double-Digit Return Thesis Intact Despite 10% Correction (NYSE:MA)


We review our investment case on Mastercard (NYSE:MA) after shares corrected by nearly 10% from their $367.25 peak on August 28.

Since our initial Buy rating in March 2019, MA shares have returned 41.8% (including dividends), more than double that of the S&P 500:

The move to digital payments is a strong secular trend, and we also have Buy ratings on Visa (V) and PayPal (PYPL), which have also done well; we have been Neutral on American Express (AXP), which underperformed as expected.

We last reiterated our Buy rating on MA in May. In this article, we utilise the company’s Q2 2020 results and post-Q2 volume data, as well as comments by senior executives at investor conferences.

Volumes Now in “Normalization” Phase

MA management believes that most markets are now in the “normalization” phase of the COVID-19 outbreak, but not yet resuming “growth”:

“Remember us talking about a four-stage

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