The rosy outlook for profits outlined last week by MasterCard Worldwide is justified, with a few caveats, analysts at Stifel, Nicolaus & Co. note in a report issued today. The Baltimore, Md.-based research company raised its price estimate for MasterCard stock well above previous forecasts, from $312 to $367 per share. In their report, the analysts wrote that some investors wonder how MasterCard could forecast double-digit revenue growth during an economic downturn (CardLine, 5/30). The key to the card brand's success is that higher consumer prices do not mean lower payment card volume, the researchers say. Moreover, strong growth in international markets is driving transaction-volume growth around the world, as are such new payment technologies as prepaid and contactless cards. MasterCard's bullish outlook of achieving average annual net-income growth of 20% to 30% "is not only achievable, but surpassable," according to the report. The only possible obstacles to MasterCard's reaching its goals would be a sharp slowdown in global consumer spending or significant regulatory changes that could affect merchant fees in the United States and in Europe, the analysts wrote. Investors might also be deterred by MasterCard's rising stock price. "The stock is not cheap, and the valuation could be vulnerable to increased economic concerns," the analysts wrote. MasterCard stock today was selling at about $310.06 per share in midday trading, down $9.94, or 3.1%, from yesterday's closing price.

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