Visa, MasterCard Can Tough This Out

Williams notes that Visa and MasterCard have not experienced a downturn -- let alone one as significant as the current crisis -- since they became public. But there are still avenues for growth, particularly internationally, he says.

To be sure, MasterCard and Visa face a number of issues that will slow the rate of purchase volume growth in the near term, including lower gas prices, slower U.S. consumer spending and a rising dollar, analysts say.

But "this is well known to investors," says Howard Shapiro, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller, in a note. "[T]he key issue to be addressed will be management's assessment of its long-term growth prospects in light of current economic conditions," he writes.

Shapiro considers MasterCard a "core long-term holding" and rates the firm at outperform, the equivalent to a buy rating. He rates Visa in-line; the equivalent to a hold rating.

Analysts on average predict MasterCard will post third-quarter earnings of $2.25 a share on revenue of $1.27 billion and Visa to record profit of 56 cents a share on revenue of $1.68 billion, according to the latest estimates from Thomson Reuters.

Unlike Williams, Citigroup analyst Patrick Burton, is concerned about both companies' growth rates for revenue and purchase volume, specifically in credit cards. He maintains a hold rating on both firms.

"Deteriorating economic conditions, consumer confidence and tighter credit lending standards in the U.S. and abroad will drive increased headwinds to credit card volume growth over the next 12 to 18 months," Burton writes in an industry note earlier this month. "We believe this has already begun to play out in the U.S. as MasterCard's domestic credit card volumes [which] were up only 0.7% [year-over-year] in the second quarter, and we have become incrementally more bearish on the Eurozone and emerging markets."