奉献国际投资银行高盛对万事达的研究报告
Investment view
We are initiating on MasterCard with a Neutral rating and a 12-month price target of
$51 (11% upside). Our view of MasterCard’s strong position as one of the primary
global payments brands and networks is balanced by the potential for litigationrelated
volatility in the shares, creating a higher risk profile relative to other
processing stocks that we follow. We believe that current valuation reflects a
reasonable discount for potential outcomes of current legal battles and our view of
roughly 7% revenue and 11% EPS growth. More compelling entry points may
emerge in MasterCard as we gain additional clarity on legal and regulatory issues
over the next several years.

Core drivers of growth
There are two primary drivers to MasterCard’s revenue: (1) transaction and dollar
volume growth, and (2) pricing trends. We remain bullish on payments growth (in
line with market sentiment), but cautious on pricing trends given consolidation of
issuers, litigation with merchants, and recently rising rebate and incentive trends.
Risks to the investment case
Legal risk remains the primary concern for MasterCard, with two high-profile cases
currently on the horizon; one is with American Express and Discover over network
exclusivity, and the other is a merchant class action regarding interchange
practices. Regulatory involvement, pricing trends, competition, and earnings
volatility remain other key risks.
Valuation
We are establishing a $51 12-month price target for MasterCard, suggesting 11%
upside to current levels and a 17.5X calendar 2007 P/E multiple. Our target was
developed using five regression-based valuation drivers, a relative view of the
company’s fundamentals to other companies in our sector, and an assessment of
potential legal liabilities. The stock ranks No. 6 within our Investment Framework.
Industry context
We retain an Attractive coverage view of processing and telecom IT services.
INVESTMENT LIST MEMBERSHIP
Neutral
Coverage View: Attractive