Goldman says Visa and Mastercard can rally more than 30% as they navigate surging inflation

As valuations fall and inflation persists, these payments firms are best situated to ride the current macroenvironment, Goldman Sachs said. Analyst Will Nance initiated coverage of Visa and Mastercard with buy ratings, saying in a note to clients Tuesday evening that both companies will benefit from the “electrification of consumer spending” and are among the best defensive names to weather inflation. “We are most constructive on V/MA, as we believe these businesses are under-earning given cross-border revenues are on recovery trajectories but still depressed, which along with higher inflation should provide an idiosyncratic growth impulse and a partial offset to any macro weakness,” he wrote. Nance also thinks both companies can benefit from a return to cross-border travel and e-commerce as well as “new flows” and services aside from consumer payments. In particular, Goldman sees a $185 trillion opportunity for Visa in areas like business to business. “Between the two, we are incrementally more constructive on Visa, and are adding the stock to the Conviction List, as we believe V’s greater US exposure could insulate it from a choppier macro environment,” Nance wrote. Nance issued price targets of $282 and $460 per share on Visa and Mastercard, respectively. His Visa target implies upside of 38% from Tuesday’s close; the Mastercard forecast is 35% above the stock’s previous closing price. Shares of Mastercard and Visa have fallen 5.7% and 5.9%, respectively since the beginning of the year. The bank also launched coverage of Fiserv with a buy rating. — CNBC’s Michael Bloom contributed reporting

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