Despite concerns about slowing volume growth for U.S. payments, Tien-tsin Huang, an analyst at JPMorgan Securities Inc., expressed confidence in Visa Inc. and MasterCard Inc., which are expected to release earnings this week.
In notes to investors Monday, Mr. Huang reiterated his "overweight" rating for the shares of both companies and raised his earnings estimates for Visa, ended June 30, saying "repricing initiatives on U.S. cross-border transactions" more than offset his "slower U.S. volume growth assumptions."
Visa, which went public in March, is scheduled to release results Wednesday for its third fiscal quarter. Mr. Huang raised his earnings estimates for the San Francisco company by 7 cents for the quarter, to 49 cents a share, and by 13 cents for the full year, to $2.10.
He was more cautious on MasterCard, citing its "higher exposure to slowing U.S. credit and Europe," a $1.8 billion settlement with American Express Co. in June, and "seasonally high" spending on marketing. Mr. Huang raised his second-quarter earnings estimate by a penny, to $1.94 a share, and kept his full-year estimate at $9.10.
A second-quarter "upside is likely" in MasterCard's report, and Mr. Huang remains bullish on its "longer-term fundamentals, but the risk-reward seems balanced," he wrote. Despite "quite weak" sentiment and "slower U.S. growth factored into our projections, we have confidence that the business model will not disappoint."
The Purchase, N.Y., company, which went public over two years ago, is scheduled to report its second-quarter results Thursday.
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