Deutsche Bank Raises Price Targets On Visa And Mastercard

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Deutsche Bank commented on foreign exchange and oil impacts to Visa Inc V and Mastercard Inc MA Friday and raised its price target on both companies.

Analysts led by Bryan Keane felt that both oil and forex are unlikely to “hold back robust fundamentals.”

“With outlooks of accelerating revenue growth in 2H15, the rise of network’s tokenization plans (including moving tokenization to e-commerce) and a long secular trend ahead,” Keane reiterated his Buy ratings on both stocks.

Keane acknowledged, however, that “lower gas prices did lead to 15 percent Y/Y decline in payment volumes at gas stations in Dec, with gas accounting for ~10 percent of US payment volume, but payments at gas stations are predominantly debit (~75 percent) which carries lower revenue yields.”

For Visa, “due to hedging, we don’t expect the company to materially change its FX outlook of a 2 pt headwind in FY15 and the pickup in FX volatility should benefit cross-border revenues,” however, a strengthening US Dollar was seen as a headwind for Mastercard.

The firm raised its price target on Visa from $268 to $316 and on Mastercard from $91 to $105. Both stocks were rated Buy.

Visa Inc recently traded at $253.55, up 0.17 percent.

Mastercard Inc recently traded at $82.60m up 0.43 percent.

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Posted In: Price TargetAnalyst RatingsBryan KeaneData Processing & Outsourced ServicesDeutsche BankInformation Technology
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