Visa Inc V shares closed 3 percent lower on July 30, while shares of Mastercard Inc MA lost 4 percent, following news of the 2012 Merchant Litigation Settlement being overturned. Bernstein’s Lisa D. Ellis recommend in a report to “buy the weakness,” since the market’s reaction to the court ruling seems to be overdone.
On June 30, an appeals court voided the 2012 $7.25B antitrust settlement between Visa / MasterCard and US merchants. Analyst Lisa Ellis enumerated the reasons for the market response seeming overdone:
- Any possible new settlement is likely after 7 to 8 years
- Visa’s financial exposure is nominal, due to Class B shares
- Other US merchant litigation is likely to be swept into any new class action
- Low regulatory risk
The negative stock reaction seemed partly due to “unfortunate timing, coincident with recent lawsuits.”
“We see no material change to our theses on V & MA,” Ellis wrote, while reiterating Outperform ratings on both companies.
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