The firm praised the credit services company for improving brand image, but notes that it still lags behind other credit card companies as an online payment brand in a survey they conducted.
Pacific Crest also cited regulatory and acquisition concerns as a reason for trepidation.
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"MasterCard is well positioned internationally, but we think investors may focus more on European regulatory outcomes and the magnitude of the U.S. Chase conversion in the near term," the firm said.
"That said, if the global macroeconomy were to meaningful improve, we think MasterCard could disproportionately benefit from a higher international transaction mix (low-60s) and a heavier credit mix (mid-50s) that tends to be more economically sensitive," they concluded.
Separately, TheStreet Ratings team rates MASTERCARD INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MASTERCARD INC (MA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 20.1%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MASTERCARD INC has improved earnings per share by 7.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MASTERCARD INC increased its bottom line by earning $2.57 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.57).
- The gross profit margin for MASTERCARD INC is rather high; currently it is at 51.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.30% is above that of the industry average.
- Net operating cash flow has increased to $1,199.00 million or 38.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.13%.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.16% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: MA Ratings Report