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Morgan Stanley analyst James Faucette reiterated an Overweight rating on Visa (NYSE:V) and Mastercard Inc (NYSE:MA) in a note to investors Friday, stating they can “benefit from the reopening of Asia-Pac,” and the travel recovery.
“V/MA can benefit from the reopening of Asia-Pac with room for more European tourism improvement, while perception of inflation risk may be overdone, especially for higher income demo,” wrote Faucette.
The analyst said the stocks remain the firm’s highest conviction Overweights and he believes current sentiment and potential upside drivers present a unique opportunity to add to positions.
Outlining 3 key reasons why, Faucette said, “the travel recovery has momentum,” while the re-opening of Asia-Pac and increasing Europe traffic can help support growth, any potential spending slowdown may be overstated, and they have “attractive valuations given accelerating earnings growth.”
“Travel recovery still has legs. We see room for continued elevated cross-border travel growth; we estimate that a full travel recovery for V/MA would be 125- 130% of 2019 levels (assuming high single-digit normalized growth over this 3-year period) compared to the 108% that Visa reported in May,” stated the analyst.
Faucette has a $452 price target on MasterCard shares and a $284 per share price target on Visa stock.
