J.P. Morgan cut estimates for Mastercard (MA) - Get Report, PayPal (PYPL) - Get Report and Visa (V) - Get Report after the financial-sector majors cut their own estimates in response to the coronavirus outbreak.
Coronavirus concern has hurt cross-border travel, especially to Asia, and has even stifled e-commerce, according to JPMorgan’s channel checks.
Visa and Mastercard are expected to see the biggest first-quarter-earnings drag from the coronavirus due to narrowing margins, while PayPal has “much lower margins and higher variable costs.”
For Mastercard, the Purchase, N.Y., payment-tech provider, J.P. Morgan lowered its Q1 earnings and revenue estimates to $1.89 a share and $4.28 billion from its previous view of $1.93 and $4.33 billion. For the year, Mastercard should earn $9.01 a share, down from $9.05, the investment firm estimated.
Visa is expected to generate $5.9 billion in revenue in its fiscal second quarter, down from J.P. Morgan's previous $6.07 billion estimate. On Monday, the San Francisco payment-tech company said the coronavirus would cause a 2.5%-to-3.5% drag on quarterly revenue.
Last week, PayPal, the San Jose, Calif., payment processor, said it expected first-quarter revenue to trend toward the lower end of its $4.78 billion-to-$4.84 billion guidance range.
J.P. Morgan lowered its first-quarter revenue estimate to $4.79 billion from $4.84 billion. It affirmed its earnings estimate at 78 cents.
Not every payment system was downgraded in a Tuesday note from J.P. Morgan.
“We’re not ready to cut estimates beyond these names, but we’re watching" WEX (WEX) - Get Report, the Portland, Maine, payment processor, "closely, given travel exposure, and waiting to see if spending fears spread to non-travel areas,” the note said.
At last check, Visa shares eased 0.2% to $191.90. PayPal shares slipped 0.3% to $112.52 and Mastercard fell 0.2% to $306.06. WEX shares were little changed at $193.30.