Oppenheimer analysts raised their rating for MasterCard (NYSE:MA) from Perform to Outperform and set a new price target of $510.00.

The analysts acknowledged that there are risks associated with MasterCard’s consensus EPS estimates for 2024 and 2025, as the company’s run-rate EPS growth is expected to slow down to mid to high-teens, similar to the levels projected before the pandemic and excluding Russia’s impact. However, they pointed out that MasterCard’s current near-term P/E multiple is around 30x, compared to its high of approximately 44.5x during COVID. Despite this, the company’s pre-COVID growth dynamics remain largely unchanged, with service growth contributing to 48% of net revenue growth.

The analysts suggest that even amid lower consumer spending, MasterCard could still achieve over 11% EPS growth. This growth could be supported by expense reductions that balance out slowing revenue growth and an increase in share buybacks. Since its October 2023 low, MasterCard’s performance has been roughly parallel to the S&P 500. The analysts recommend investing in quality companies like MasterCard at the start of 2024 instead of pursuing highly-valued Fintech stocks.

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