Bernstein analysts have expressed a stronger outlook for Visa (NYSE: V) over Mastercard (NYSE: MA) in 2025, citing several key factors that favor Visa’s position in the market.
Key Reasons for Visa’s Favorable 2025 Outlook
Visa’s market position is strengthened by the reduction of selling pressure related to Class B share conversions. Additionally, Mastercard is facing several potential challenges that could impact its performance in the coming year. These challenges include the effect of the Capital One-Fair Isaac Corporation deal, which is expected to have greater implications for Mastercard, as well as the annualization of significant volume contributions from Citizens and Wells Fargo. These two companies together account for over $60 billion in transactions. Furthermore, Mastercard will be facing the impact of its own pricing changes for tokens, which could affect its results in 2025.
Visa, on the other hand, boasts a market capitalization of $647.5 billion and has a proven track record, having raised dividends for 17 consecutive years. This highlights its strong leadership in the market.
Favorable Foreign Exchange and Inflation Hedge
Visa’s prospects are also bolstered by foreign exchange conditions. While foreign exchange volatility hindered performance in 2024, it is expected to turn into a tailwind for Visa in 2025. However, this could be partially offset by the recent strength of the U.S. dollar. Analysts also highlighted the sector’s ability to act as an inflation hedge, along with potential for pricing actions, such as those already implemented by Mastercard for token transactions in international markets.
Visa’s financial health remains exceptional, with a gross profit margin of 97.83% and a strong return on equity of 52%, according to data from InvestingPro. The company’s solid financial standing is supported by 12 additional key insights available to investors through InvestingPro’s comprehensive research.
Mastercard’s Challenges and Visa’s Global Opportunities
While Mastercard is also facing some positive developments, such as the Trump Administration’s withdrawal from the Global Tax deal, Visa’s overall prospects seem more robust. Visa has the potential to command a higher multiple, much like a ‘services’ company, which offsets concerns about market maturity in the U.S. Analysts suggest that while U.S. card volume growth may be nearing saturation, international growth opportunities for Visa remain significant. The slowdown in U.S. card volume growth may be overstated, as international markets continue to expand.
Positive Outlook for Visa in 2025
Bernstein analysts suggest that Visa’s prospects for 2025 look promising. Factors such as the upcoming investor day, potential for card volume growth, favorable foreign exchange conditions, and attractive pricing strategies contribute to a positive outlook for the company.
Recent Developments for Visa
In recent news, Visa has seen several important developments that could further strengthen its market position. Piper Sandler has raised Visa’s stock price target to $368, citing the company’s integration of AI into its services. This AI integration is expected to help reduce fraud losses over time.
However, Visa is facing a whistleblower complaint alleging that it neglected illicit revenue streams from the website OnlyFans. The complaint was filed with the U.S. Treasury’s Financial Crimes Enforcement Network.
Visa has also made strategic investments, including a significant stake in Nigerian fintech Moniepoint, which supports the growth of small and medium-sized enterprises in Africa. Seaport Global Securities has upgraded Visa’s stock rating from Neutral to Buy, recognizing the company’s increasing focus on the U.S. market, which could drive revenue and earnings growth.
Additionally, Visa completed the acquisition of Featurespace, a firm specializing in AI technology for payments protection. This acquisition is aimed at enhancing Visa’s fraud detection and risk-scoring capabilities.
Susquehanna has reaffirmed its positive stance on Visa, raising its stock price target to $375.
Conclusion
Visa continues to demonstrate strong leadership in the payments sector. With a solid financial foundation, strategic investments, and favorable market conditions, Visa appears well-positioned to outperform Mastercard in 2025. These recent developments underscore Visa’s commitment to innovation and its ability to navigate challenges in the industry.
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