Analyst: Visa, Mastercard Stocks Will Enjoy Tax Bill Tailwinds

Add V and MA stocks to the list of potential tax reform winners

Dec 28, 2017 at 10:28 AM
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Analysts in recent weeks have highlighted a number of stocks to buy following the passage of the new tax bill. Susquehanna this morning is targeting yet another group, that being domestic credit card and financial technology companies. The covering analyst forecasts bigger profits in 2018 thanks to tax reform. Two stocks the brokerage firm is bullish on are Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA). We'll break down the recent action on V and MA shares below.

V Shares Touch Record High

Susquehanna boosted its price target on Visa stock to $148 from $126, far into record-high territory. In fact, the shares just tapped a record high of $114.84 after rising 0.7% today. The security has had a monster year, rallying 46%, with a recent pullback neatly contained by the 80-day moving average.

Meanwhile, options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have seemingly been betting on more upside. Specifically, the equity has accumulated a 10-day call/put volume ratio of 3.82 across the exchanges. Not only does this reading show almost four calls have been bought to open for every put, but it ranks in the bullish 87th annual percentile.

Weekly Call Traders Target MA Stock

Susquehanna is calling for record highs from Mastercard stock, as well, raising its price target to $180 from $170. The shares have so far gained 0.6% to trade at $152.35, putting them within striking distance of their Dec. 18 record peak of $154.65. Like Visa, MA stock recently found support from the 80-day moving average, and overall has added close to 48% in 2017.

Call buying has been the strategy of choice among Mastercard options traders, too, based on the 10-day call/put volume ratio of 1.33 across the ISE, CBOE, and PHLX. Digging deeper, the weekly 12/29 152.50-strike call saw the largest increase in open interest during the past two weeks, so anyone buying to open the contract is expecting the credit card stock to push higher by expiration at the close this Friday.

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