Oppenheimer Boosts Targets On Visa, MasterCard Ahead Of Q2 Results

In a report published Monday, Oppenheimer analyst Glenn Greene maintained Outperform ratings on

and

. Greene raised the price target on both the stocks from $73 to $81 and from $95 to $105, respectively, ahead of the 2Q results. The currency headwinds faced by the companies in 1Q seem to have "abated to some extent" during 2Q, although the lackluster retail growth trends appear to have "persisted." In the report Oppenheimer noted, "US retail spending decelerated during 2Q (in part reflects ~2.7 point Y/Y gasoline volume drag), continuing the pattern of growth deceleration since 3Q11. Y/Y issuer volumes for the quarter were mixed but relatively solid overall, with BAC and Citi NA posting improved growth." Both companies had "flattish" share performance during 1Q. In 2Q, Visa shares rose around 2.7 percent, while MasterCard's shares surged more than 8 percent. "We attribute these gains to increasing (albeit still relatively low) US gasoline prices (~16% Q/Q increase in 2Q) and the euro's appreciation vs. the US dollar since last guidance (likely partially explains MA's relative outperformance, although we note offsetting real weakness during 2Q)," Greene said. While stating that the fundamental near- and long-term outlooks of both companies remained "encouraging," Greene added, "We prefer V relative to MA at present given its modest relative discount, potential 2H growth acceleration, and increased probability that the V Europe put is exercised, which does not appear discounted by investors."