This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Visa, MasterCard, Decline on Downgrades

NEW YORK (TheStreet) -- Visa (V) and MasterCard (MA) were lower in early Friday trading, off 0.5%, and 0.3% respectively, as Sterne Agee analyst Greg Smith downgraded both companies, citing full valuations.

Smith downgraded Visa to "neutral" from "buy," saying he does not see any major catalysts in the future, and expects the stock to perform along with the S&P 500.

"Our positive fundamental view on Visa remains unchanged as we still view the stock as the single best long-term way to play the secular growth in electronic payments," Smith wrote, in his note. "With that said, headline risks are incrementally more of a concern now." He kept his $175 price target on shares.

There has been some concern that Visa Europe would eventually be sold to Visa (the two are separate companies, though they share the same name). Smith believes that transaction would be beneficial to earnings by as much as 6% to 7%, but there are others on Wall Street who feel that Visa would be forced to pay up for Visa Europe, thus diluting any potential benefits.

Visa has a call option to buy shares in Visa Europe, while the European banks that own Visa Europe have a put option to sell the shares to the U.S.-based Visa. The put option is defined as a risk by Visa, as it would force Visa to spend billions to buy the company, and could force Visa to tap the public markets to pay for the transaction, either through debt or selling equity.

MasterCard was also on the chopping block for the same reason; valuation, but Smith noted that some of the recent momentum in the payments space has moved to Visa from MasterCard as it faces tougher comps ahead. "Now, MasterCard is growing over these wins while we also sense a general momentum shift towards Visa and away from MasterCard," Smith penned in his note. "Visa is clawing back some of its lost debit market share and with Visa's new 10-year agreement with Chase, we expect MasterCard to lose some of its business with Chase."

--Written by Chris Ciaccia in New York

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs