4 Reasons Why You Should Buy Mastercard Ahead Of Q2 Earnings

Wall Street expects Mastercard to earn $0.90 a share on revenue of $2.59 billion for the second quarter.

Analyst James Fotheringham listed four reasons why investors should buy Mastercard ahead of earnings:

1. "It has recently underperformed"
2. "We believe its 2Q16 EPS could surprise positively"
3. "We prefer its orientation to consumers, not corporates"
4. "Our updated Financials Investment Framework continues to highlight MA as a high-conviction long-term investment opportunity (high growth, good value)"

Mastercard shares have underperformed the S&P 500 by almost 9 percent since the Brexit vote, due to a proposed U.K. consumer class-action lawsuit (which is expected to be "thrown out"). Further, the concerns over the reversal of an antitrust settlement were overdone. The analyst expects shares should bounce back.

Fotheringham believes Mastercard's second-quarter EPS could surprise positively, following strong volume growth and lower-than-expected operating expenses. The analyst's $0.92 EPS forecast for the second quarter is two cents ahead of consensus.

In addition, the analyst said Mastercard should benefit from its predominantly consumer-derived revenues post Brexit.

Further, BMO's updated Financials Investment Framework continues to highlight the stock as a high-conviction long-term investment opportunity.

"[E]ven if we get the quarter wrong, we are still comfortable holding MA shares as a long-term investment," Fotheringham added.

At the time of writing, shares of Mastercard were up 0.21 percent to $88.75.