Why Did PacCrest Just Upgrade MasterCard?

In a report published Tuesday, Pacific Crest analyst Josh Beck upgraded the rating on

to Overweight, with a price target of $110. The price cap in EU could have a ripple effect, shifting competition to services and scale. This news is most positive for Mastercard, Visa Europe, PayPal and

, while being mixed for

and domestic schemes. In the report Pacific Crest noted, "Rising complexity as exemplified by token services, NFC and data analytics, as well as a greater emphasis on economies of scale, place the global payment networks at a distinct advantage in a region with price caps, in our view. The credit mix dynamics are a wild card, with issuers incentivized to drive interest income, but the consumer value proposition could fade." "Domestic schemes are beginning to find partners, but lack scale and could be pressured by price unbundling…Even with potential long-term pricing pressures, deepening payment penetration in the EU could add $1 billion or more of revenue over the next five years," Beck added. The upgrade in rating comes against the backdrop of a shift "in our bias from V, which outperformed MA over the past year," Beck explained.