Mastercard Jumps as Revenue Outlook Tops Analysts’ Estimates

(Bloomberg) -- Mastercard Inc. shares jumped after the firm’s cross-border spending held up better than larger rival Visa Inc.’s and it offered a new revenue forecast that topped analysts’ estimates.

Mastercard said it now expects adjusted revenue to increase by a percentage in the “low teens” this year, while adjusted expenses will climb by a percentage in the “high end of high single digits.” Between 2019 and 2021, revenue will grow by a percentage in the “low teens,” while profits will rise by a percentage in the “high teens.”

“The consumer is still spending,” Chief Financial Officer Martina Hund-Mejean said in an interview Thursday. “We were very successful in the past and that gives us a certain confidence to build the future.”

Mastercard also said cross-border payments volume -- a measure of cardholders’ spending abroad -- climbed 18.9 percent last year, higher than the 14.6 percent growth in 2017. Analysts were concerned about that metric after Visa said on Wednesday that cross-border spending climbed 3 percent in the three months through December, the smallest uptick in at least five quarters, as spending in the U.S. by consumers from outside the country declined.

Mastercard Jumps as Revenue Outlook Tops Analysts’ Estimates

“Mastercard gave its initial outlook for 2019 and for the three-year period 2019 to 2021 that was better than expected,” Robert Napoli, an analyst at William Blair & Co., said in a note to clients. “Cross-border volume did not decelerate as we saw at Visa.”

Mastercard is expected to post revenue of $16.8 billion this year, a 12 percent increase from 2018, according to analysts’ estimates compiled by Bloomberg. Expenses are expected to climb 8.2 percent to $16.9 billion.

The company’s shares rose 4 percent to $212.18 at 12:19 p.m. in New York, the third-biggest gain among the 68 companies in the S&P 500 Information Technology Index. Visa fell 1.5 percent to $135.61.

Mastercard said its forecast excludes any assumptions the company might have about its progress to enter the domestic payments market in China. Both Mastercard and Visa are awaiting approval from China’s central bank to begin processing transactions in the country.

“There’s still a lot of work that we have to do,” Hund-Mejean said. “We have been at this for a number of years now and it’s not an easy environment to operate in. We are hopeful that with the kind of partnerships that we have struck there that eventually we get to do that and we get a license.”

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