Expecting Upside in MasterCard as SunTrust Jacks Target to $390

by: Notable Calls June 02, 2008 | about stocks: MA    
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SunTrust is out with a nice call on MasterCard (MA), raising its 2008 and 2009 EPS estimates to the Street high. While the proximate cause of the Firm's more aggressive view is the Company's higher long-term EPS growth guidance issued at last week's investor day, it is some of the more nascent growth opportunities cited and the discussion of relatively strong non-US volume growth which augment the Firm's confidence.

SunTrust is raising its price target from $350 to $390 and is again moving 2008 and 2009 EPS estimates to the Street high. New 2008 and 2009 EPS estimates are $8.94 and $12.17 respectively, compared with prior 2008 and 2009 EPS estimates of $8.68 and $11.08.

MasterCard seems ideally positioned to continue capitalizing on the global secular shift to electronic payments. While SunTrust believes this is well understood, the power of this growth driver is only now coming into focus as the Company enjoys above-trendline volume growth despite deceleration in the US, its largest single market.

The Firm is also encouraged by management's goal of 300-500 basis points of annual operating margin improvement. It is its opinion that MasterCard will outperform this target over the next few years as it scales its processing infrastructure and rationalizes is operating expenses. Even longer term operating leverage of this magnitude suggests sustainable EPS growth of at least 20%, making MA one of the best growth names in the Firm's universe.

Notablecalls: SunTrust is pretty much the axe regarding both MA and Visa (V). They have been ahead of the pack for quite some time and it seems they are doing it again. With the stock technically so strong, I would expect ample upside today. Be early and be aggressive.

I feel for the shorts. Truly do. MA has been a short buster lately.

Note that SunTrust's $390 target is also the new Street high.

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This article has 5 comments:

  •  
    Jun 02 10:56 AM
    ...and you know what, ma will beat, chew, spit and smash even the 12.17 eps of 2009. with average of beat of 35 to 50 cents, i think eps has much more upside towards 13.5 bucks for 2009. stock way undervalued here....
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  •  
    Jun 02 04:44 PM
    Good call on "be early, be aggressive." I guess no one cares about a SunTrust upgrade, and the stock finished down over 1% after an initial sharp pop in the morning. Lots of early, aggressive bagholders finally gave up and dumped their shares near the close. But that's ok, because it gave me an opportunity to "be late, be aggressive." This stock will see $350 within 6 months, with or without upgrades or silly Seeking Alpha articles.
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  •  
    Jun 02 05:59 PM
    Is everyone on the same page now Goldman said to sell at 80.00. I PURCHASE MORE i own at 43.00 dollars to 85.00 I AM DOING WELL I JUST DONOT NEED THE KNOW-IT-ALLS TO EXPLAIN TO ME HOW MA MAKES $$$$$$, BUT THAN THE SAME PEOPLE PUT THE STOCK DOWN. A VERY SMART INVESTOR.
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  •  
    Jun 02 06:09 PM
    >>>>But that's ok, because it gave me an opportunity to "be late, be aggressive." This stock will see $350 within 6 months, with or without upgrades or silly Seeking Alpha articles.

    at 350 will still be cheap compared to v and on top of that a much compelling global story than the home state v hero.
    Reply | Link to Comment
  •  
    Jun 07 04:17 PM
    please check my blog at matrader.blogspot.com/

    i have started it just now and hope to beef up and give bash free news. both +ve and -ve news will be there. but not bashing...

    "cash in wallet: $20; cash in car deck: $12; cash in wife's wallet: $40; cash with my little son: $0; having mastercard with me always: priceless".

    matrader.blogspot.com/
    Reply | Link to Comment
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