MasterCard Soars to All-Time High

The credit card processor offered a bullish forecast 2008 and beyond.
By Laurie Kulikowski ,

MasterCard

(MA) - Get Report

shares soared to an all-time high Thursday after the company offered a bullish near-term outlook, despite a slowdown in the U.S. economy.

Executives at the Purchase, N.Y.-based card processor, during a four-hour long investor presentation, also said they expect double-digit revenue growth in 2008 and double-digit profit and revenue growth over the next few years. MasterCard expects average annual net revenue growth in the range of 12% to 15% over the long term, while annual net income could increase by 20% to 30% going forward, and operating profit margins should rise by three to five percentage points, executives said.

The news sent shares of MasterCard up more than 10% to $316.96 on Thursday. More recently, the stock has retreated slightly, but was still up 8.4% to $311.09, on trading volume of more than 10 million shares, or more than triple what the stock normally trades in a day.

Shares of its larger rival

Visa

(V) - Get Report

also spiked as much as 6%, while competitors

Discover Financial Services

(DFS) - Get Report

and

American Express

(AXP) - Get Report

rose between 1% and 2%.

MasterCard said the key drivers to the revenue and operating margin guidance include the secular trend away from paper and toward electronic payments. It also cited the growth of non-U.S. markets at a faster rate than the U.S., while the company also plans to ramp up its debit card market share, among other things.

"There are more opportunities for us than threats," CEO Robert Selander said.

But despite the positive guidance, several executives who gave presentations took a cautious tone when it came to the U.S. economy.

"We continue to see

gross dollar volume growth slowing in the U.S.," according to CFO Martina Hund-Mejean. Still roughly half of Visa's revenue is generated outside the U.S., which acts as a "buffer" to the current economic downturn in the states, she said.

Last year, gross dollar volume in the U.S. rose slightly more than 10%, while it rose two to three times that amount outside the U.S., the company said.

This month, MasterCard celebrated its two-year anniversary as a public company. Shares have risen more than sevenfold since its initial public offering price of $39. Visa went public in March. Shares have nearly doubled from its IPO price of $44 a share.

Loading ...