Buy Mastercard for cross-border fees and services growth. My $655 target implies 14.8% upside as double-digit sales and near-60% margins hold.
Key points
- $9.28 billion in Q2 FY26 revenue, up 14.1% from a year ago, extends double digit growth.
- 60.2% operating margin in Q2 FY26, or profit kept per sales dollar, hit a record high.
- 41.2% of Q2 FY26 revenue came from services such as fraud tools, steadying card swings.
The call
The market is too gloomy for this quality. At $570.48 per share in Oct 2026, the price needs about 12.0% revenue growth in FY27. It also needs profit share of sales near 59.0% in FY27.
Quarterly revenue keeps growing at double digits- Reported revenue
- My forecast
SEC XBRL facts to Q2 FY26; Q3-Q4 FY26E my forecasts. Oct 8 2026.
I see stronger growth ahead. I expect $37.20 billion in revenue in FY26, up 13.4% from FY25. Cross border card use across countries lifts fees with profit share of sales near 60.0% in FY26. That path drives $22.98 in profit per share in FY27.
Valuation
| Item | Estimate |
|---|
| Revenue in FY26 | $37.20 billion |
| Revenue in FY27 | $41.66 billion |
| Profit per share in FY27 | $22.98 per share |
| Multiple paid per profit dollar | 28.5 times for FY27 |
| Target by Oct 2027 | $655.00 per share |
A 28.5 times multiple for FY27 fits steady growth with 60.0% margins in FY26. Slower card networks trade lower in FY26. Upside of 14.8% over 12 months with small downside supports a buy.
Operating margin pushing toward 60 percent- Reported margin
- My forecast
SEC XBRL facts to Q2 FY26; Q3-Q4 FY26E my forecasts. Oct 8 2026.
Risks
- Spending can slow if jobs weaken in FY27, which you would see in lower purchase volumes in monthly reports.
- Fee rules can cut network income in FY27, which you would see in new court or regulator filings.
- Account based transfers can take card share in FY27, which you would see in falling cross border volume in quarterly data.
What would change my mind
I would turn cautious if services growth falls below 12.0% in FY26 with profit share of sales below 57.0% in FY26.