Earnings Preview: MasterCard

MasterCard (MA) is expected to report Q4 earnings tomorrow, Thursday, February 3 before the market open with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for EPS of $3.04 on revenue of $1.42B. The consensus range is $2.83-$3.46 for EPS, and $1.35B-$1.49B for revenue, according to First Call.

Analyst Views

In a note to investors on January 25, Oppenheimer recently offered a bullish assessment of the company. According to the analyst, MasterCard's fundamentals are still strong, as the company's purchase volume, transaction and cross-border trends continued to be healthy during Q4. The firm, which views the stock as "highly attractive," expressed optimism that MasterCard's multiple would expand significantly when the controversy over the Durbin amendment is resolved. The Durbin amendment is legislation that has forced the Fed to set strict limits on the fees that MasterCard charges to retailers who accept its debit cards. Even if Durbin's legislation is not overturned, Oppenheimer believes that MasterCard can generate EPS growth in the high teen to low 20% levels. In addition to the Durbin amendment, MasterCard faces a threat from cellular phones equipped to make purchases. Starbucks (SBUX) recently announced that it will allow its customers to use a variety of mobile devices, including RIMM (RIMM) and iPhones, to pay for their drinks, and other retailers could soon follow suit. MasterCard recently announced that it would team with Telefonica (TEF) to develop mobile payment systems in Latin America, but investors may look to determine whether the credit card issuer is moving quickly and comprehensively enough to deal with the competitive threat from phone makers and carriers.