Mastercard Inc MA reported its top-line results above investor expectations, while revising its FY16 guidance up.
Barclays’ Darrin D. Peller maintains an Overweight rating on the company, while raising the price target from $107 to $110.
Top-Line Beat
Peller mentioned that the top-line beat was driven by stronger-than-expected processed transaction and cross border volume trends, which also drove the guidance raise.
MasterCard reported processed transaction growth rose from 14 percent year-on-year in Q2 to 18 percent year-on-year.
Guidance Raised
The company raised its FY16 guidance, now expecting low double digit constant currency net revenue growth, driven by FX impact of deal wins in debit.
MasterCard also expects a full-year tax rate of 28–29 percent, along with LDD CC growth for operating expenses.
Management guided to bet revenue growth in the low to mid-teens, on a constant currency basis, for the long term.
“Management stated that value added services are not a distraction from MA's core, but rather act as complimentary product offerings that help the company connect deeper with its partners to create incremental value,” according to the Barclays report.
Peller views the revised guidance as conservative, raising the FY17 EPS from $4.20 to $4.38.
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