Visa (V) and Mastercard (MA) are expected to continue benefiting from a positive outlook on international travel, with international departures from the US climbing above pre-pandemic levels, analysts at Morgan Stanley wrote in a note Monday.
Citing data from the US International Trade Administration and Department of Homeland Security as well as anecdotal information from airlines, Morgan Stanley analysts said international travel likely will stay healthy through 2024 while supporting “higher-yielding cross-border volume growth at Visa and Mastercard.”
Total card spending, as recently reported by the larger banks, similarly continued to edge higher during the first three months of 2024 compared with the prior quarter, they said.
The analysts also expect the credit card companies to drive increased revenue over time through a variety of value-added services for merchants and financial institutions, including new customer identification, cybersecurity and open banking applications.
Overall, Visa and Mastercard should produce “consistent” double-digit growth in their respective per-share earnings, with room for modest multiple expansion, Morgan Stanley analysts wrote.
Morgan Stanley reiterated the overweight ratings for Visa and Mastercard stocks, and set a $318 price target for Visa shares and $536 for Mastercard shares.