Shares of MasterCard closed at $452.17 Thursday, returning 22% year-to-date, following a 67% return during 2011.
The shares trade for 18 times the consensus 2013 EPS estimate of 25.60.
Sakhrani's price target for MasterCard is $525, implying 16% upside for the shares.
The consensus estimate is for MasterCard to report third-quarter earnings of $5.91 a share, increasing from operating EPS of $5.65 in the second quarter, and $5.63, during the third quarter of 2011.
Sakhrani estimates the company will report third-quarter earnings of $5.87 a share, with full-year EPS estimates of $21.82 for 2012 and $25.68 for 2013.
When discussing the effect of foreign exchange on the card processors' earnings, the analyst said "given that Visa hedges its FX exposure, this will mainly affect MasterCard's earnings." MasterCard's management provided updated FX impact guidance during its investment community meeting (which was unchanged from the guidance it gave on its 2Q12 earnings call).
"For MasterCard, we have incorporated 7% year/year GDV growth on a reported basis for 3Q12, which compares to 9% in 2Q12," he said.
Sakhrani expects MasterCard's operating margin to improve to 55.8% in the third quarter, from 54.6% in the second quarter, and 55.1% in the third quarter of 2011.
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