Argus analyst Stephen Biggar has upgraded Mastercard Inc. to "buy" from "hold," writing that the company's increased operating earnings in the fourth quarter of 2017 shows growth in cross-border volumes and processed transactions.
The analyst expects MasterCard to trade above its historical average earnings multiple, given strong cyclical and secular trends in the payment processing industry. U.S. tax reform should also play into a higher share price, he added. The company's management is projecting an effective tax rate of 20% in 2018, down from a rate of 27% in 2017.
Biggar told investors in his research note that MasterCard is likely to strengthen growth by seizing more payment flows through its consumer, commercial and virtual cards and by leveraging its VocaLink Holdings Ltd. acquisition.
The analyst's price target on the company is $200.
