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Piper’s Macro Team is increasingly worried that Europe may enter a recession in 2023, a scenario that would be negative for payment companies given their exposure to Europe.
“Europe is MA’s largest region and V’s second largest. We think that a more challenging revenue scenario in 2023 will put future pressure on earnings estimates and the P/E multiples for both companies,” Donat said in a client note.
The analyst also cut FY23 EPS estimates, which then led him to slash the price target on Visa to $239.00 per share, down from $283.00. A new PT for MA is $357.00, down from $360.00.
“While our biggest concern is a European recession, other factors also weigh on our outlook. We think underperformance of payment growth in Asia might represent a ‘new normal’ that lasts for years. We believe inflation and other macro factors could decrease discretionary spending and ultimately slow cross-border activity. We also see headwinds to GAAP earnings growth from unfavorable FX trends,” the analyst added.
Shares of Visa and Mastercard are both down 1.4% in pre-open Friday.
By Senad Karaahmetovic
