Visa Inc. stock is down more than 2% during early trading hours today, while Mastercard Inc. (NYSE:MA) shares are down over 1.5%. They trade in the red, as Bank of America Merrill Lynch downgraded the two payment service companies’ stocks.
The research firm revised down the rating on Visa® shares from Buy to Neutral, and lowered the target price from $85 to $75. It stated that there is a risk of possible material domestic slowdown in the US consumer spending, which may negatively impact the company’s performance and valuations; however, it should be noted that consumers are in a financially-decent position.
Merrill Lynch also downgraded Mastercard stock from Buy to Neutral, and slashed its price objective from $105 to $92. It stated similar reasons for the downward revision.
Visa® and Mastercard® have been facing immense competition from Paypal. Recently, Piper Jaffray commented that the two companies have started to offer similar functions as their smaller rival. It mentioned that the mounting competition may hurt Paypal’s transaction margins.
Source: Google Business New