Fly Intel: What to watch in credit card space earnings reports
American Express (AXP), Visa (V), and MasterCard (MA) are scheduled to report quarterly results on July 19, 23, and 30, respectively. What to watch for: 1. OUTLOOKS: During the company's last earnings call, Visa backed its fiscal year 2019 net revenue growth view in the low double digits, and said it sees effective tax rate of roughly 20%. Additionally, the company said it sees fiscal year 2019 class A earnings per share growth in the high-end of mid-teens range on an adjusted, non-GAAP nominal dollar basis. Also during its last earnings call, American Express backed its fiscal year 2019 adjusted earnings per share view of $7.85-$8.35, with consensus $8.13, and its fiscal year 2019 revenue growth guidance of 8%-10%. Meanwhile, MasterCard said it sees fiscal year 2019 GAAP sales growth at high end of low double digits, non-GAAP revenue growth in the low teens, operating expenses in the high single digits. The company also expects second quarter revenue growth consistent with or slightly better than first quarter, and fiscal year 2019 tax rate closer to bottom of 19%-20% range. 2. SALES ACCELERATION: In a research note to investors last month, BofA/Merrill analyst Jason Kupferberg reinstated coverage of American Express with a Buy rating and $145 price target. The analyst said he expects sales acceleration relative to first quarter levels for the remainder of 2019. Not only does American Express have much less exposure to credit than other card companies, it benefits from lower interest rates, the analyst noted. 3. EXPANDING MARKET OPPORTUNITY: Last week, Deutsche Bank analyst Bryan Keane raised his price target for Visa to $225 from $177 and reiterated a Buy rating on the shares. Although the payment networks have a long runway to benefit from the secular growth of card-based transactions, the expanding market share opportunity into new account-to-account payment flows and non-interchange based revenue models are being underappreciated, Keane contended. 4. PARTNERSHIPS: Last month, Visa announced a new strategic agreement with Western Union (WU), with the latter implementing Visa Direct, Visa's real-time push payments platform, "in an effort to bring speed and transparency to the process of sending money around the world." Meanwhile, Uber (UBER) said it was teaming up with BBVA (BBVA) and Mastercard to roll out a debit card for drivers in Mexico, Reuters' Julia Love reported, citing comments from Federico Ranero, Uber Mexico's general manager, at an event announcing the program. This comes two months after Mastercard announced an expanded partnership with Lyft (LYFT), with its Lyft Direct Debit, a new co-branded debit card and bank account issued by Stride Bank and powered by Payfare.