Why These Credit Card Stocks Are Catching Analyst Attention Right Now

The payment processing landscape is heating up. With consumer credit card debt hitting an unprecedented $1.13 trillion in 2023 – a jump of $50 billion just in the fourth quarter – major payment processors are facing both unprecedented challenges and remarkable opportunities. TD Cowen analyst Bryan Bergin isn’t overthinking the opportunity here; he sees it as fundamentally “durable” and worth investing in. The reason? The ongoing digital transformation of payments, combined with emerging revenue streams from value-added services, creates a sustainable foundation for double-digit growth in the coming years.

The Two Giants Drawing Analyst Interest

Bergin has initiated Buy ratings on both Visa and Mastercard, two titans that dominate a $45 trillion global consumer spending market still in the early stages of digital penetration. Let’s examine why these credit card stocks are commanding serious attention from the Street.

Visa: The Consistency Play

Starting with Visa (V), the world’s leading payment processor commands a formidable $545 billion market valuation. The company operates an unparalleled network: 4.3 billion cards in global circulation, partnerships spanning over 14,500 financial institutions, and acceptance at 130+ million merchant locations worldwide. In 2023 alone, Visa facilitated over 283 billion transactions – a staggering volume that underscores its central role in global commerce.

The numbers tell a compelling story. In its most recent fiscal quarter (1Q24), Visa delivered $8.6 billion in revenue, representing nearly 9% year-over-year growth and beating forecasts by $50 million. Net income hit $4.9 billion (non-GAAP), translating to $2.41 EPS – seven cents ahead of expectations. What’s particularly noteworthy is Visa’s cash generation capability; the company closed 2023 with over $13.5 billion in liquid assets.

Bergin highlights three critical strengths: the company’s proven consistency, its robust profit margins, and its exposure to an underpenetrated market opportunity. As he notes, Visa benefits from expanding “new flows” beyond traditional card payments, positioning it to capture emerging revenue opportunities. His $320 price target implies 18% upside potential from current levels. The broader analyst community concurs, with Visa holding a Strong Buy consensus (23 Buy vs. 3 Hold ratings), averaging a $308.67 target against a trading price of $271.28.

Mastercard: The Growth Accelerator

Mastercard (MA), meanwhile, brings a different but equally compelling profile to the credit card stocks conversation. With a $429 billion market cap and approximately 309 million US-based branded cards in circulation (roughly one quarter of its global footprint), Mastercard has demonstrated superior momentum lately. The stock gained 24% over the past 12 months, outpacing the S&P 500’s 22% return.

Performance metrics underscore this strength. For 4Q23, Mastercard reported $6.5 billion in total revenue – up 13% year-over-year and $20 million ahead of guidance. The company’s adjusted EPS of $3.18 beat consensus by 10 cents. Notably, gross dollar volume for the full year 2023 reached $9 trillion, reflecting 10% quarterly growth even in an economically uncertain environment.

Bergin views Mastercard as a “high growth, high margin, durable business” positioned to deliver outsized returns over the medium to long term. The catalyst? A $45 trillion global payments market where digital adoption remains incomplete, combined with Mastercard’s advantages in cash conversion, expanded merchant acceptance, and diversified credentials. His $545 price target points to 18.5% potential upside. Street sentiment aligns strongly – a 28 Buy to 1 Hold consensus (Strong Buy rating) underpins an average $515 target, suggesting 12% upside from the $459.79 trading price.

The Bigger Picture

What both Visa and Mastercard share is exposure to structural, secular payment trends that go beyond typical cyclical concerns. As consumers increasingly shift from cash to digital payments, and as these platforms expand into adjacent services, the addressable market expands correspondingly. Bergin’s confidence in these credit card stocks reflects confidence in these long-term fundamentals – not a short-term trade, but rather recognition of durable, cash-generative businesses positioned at the center of a decades-long transformation in how the world pays.