Mastercard (MA) hailed its push to diversify beyond its traditional payments network as it reported quarterly earnings that beat expectations, sending MA stock towards a record high in the pre-market session on Thursday, January 30th.
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The credit card operator said efforts to expand into areas like fraud solutions and global money transfers helped it post adjusted net income of $3.5 billion in the Fiscal fourth quarter. Earnings per share of $3.82 were up 20% on the same quarter in 2023 and trumped the $3.69 expected.
Fourth quarter net revenue rose $7.5 billion, an increase of 14% from $6.5 billion in the year-ago quarter.
Global purchase volume – the aggregate dollar value of all purchases made using a Mastercard-branded card – rose more than 12% to $2.11 trillion. Cross border volumes, which measures spending on cards outside their country of issue, was up 20%.
It comes after American Express (AXP) also delivered a strong quarterly report last week as consumer spending remained resilient. Visa (V) reports Fiscal Q1 2025 earnings later today.
MA Looks to AI
Last month, MA completed the acquisition of Recorded Future, an AI-driven threat intelligence firm, as part of its efforts to upgrade its fraud prevention and cybersecurity offering. The idea is that AI can help predict potential threats and take mitigating action before it occurs.
Commenting on the results today, Mastercard CEO Michael Miebach said, “Our diverse capabilities in payments and services and solutions – including the acquisition of Recorded Future this quarter – set us apart and position us well for long term growth.”
Net revenues from value-added services like fraud prevention increased 17%, driven by strong underlying demand and the scaling of MA’s security and digital and authentication solutions, the company said.
MA forecast net revenue to increase in the low double-digits percentage range in 2025, against the average analyst estimate of 12.7% growth.
Is MA a Good Stock to Buy?
Overall, Wall Street has a Strong Buy consensus rating on MA shares, based on 22 Buys and three Holds. The average MA price target is $592.25, implying almost 8% upside from the current level.
