By Sam Boughedda
A BofA analyst released two notes Tuesday focusing on the upcoming earnings reports of Visa (NYSE:V), Mastercard (NYSE:MA), and PayPal (NASDAQ:PYPL).
The analyst maintained Buy ratings on Visa and MasterCard. Visa reports earnings for its latest quarter on July 26th, while Mastercard reports on July 28th. Based on Visa's mid-quarter update, the analyst told investors that they believe Visa and Mastercard's underlying business performance was generally tracking modestly ahead of expectations but "likely faced incremental FX headwinds from the USD strengthening."
BofA modestly trimmed estimates on both companies, with the price target on Visa reduced to $253 from $265 per share, while MasterCard's price target was cut to $395 from $428.
"While we expect V and MA to reiterate confidence in their constant- currency growth guidance for F22, we anticipate both will build additional FX headwind into the outlook," said the analyst, who added that both companies are "well-positioned" to weather a recession.
On PayPal, which reports on August 2nd, the analyst lowered the firm's price target to $87 from $95 per share, reiterating a Neutral rating. He explained that given its year-to-date stock underperformance, they see a "relatively low bar heading into the print, but big picture questions will likely remain coming out of the quarter."
"At our Global Tech Conference in June, management suggested that PYPL's operating environment had not materially changed since the time of the 1Q call, and therefore our sense is that 2Q guidance should be close to the mark," the analyst wrote.
"We expect PYPL to deliver 2Q results in-line to slightly ahead of BofAe revs/EPS ests of $6.77B/$0.87 (in-line with Street, as well as with guide of $6.8B/$0.86)."