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Strategies & Market Trends : Can you beat 50% per month? -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (12619)	12/11/2007 11:09:38 AM
From: Smiling Bob	Respond to of 19257

Ahead of the Bell: Credit Card Companies Tuesday December 11, 8:53 am ET Keefe Bruyette Upgrades Mastercard; Downgrades Discover on Recession Fears NEW YORK (AP) -- Keefe, Bruyette & Woods upgraded shares of MasterCard Inc. Tuesday, saying the credit card lender can cut costs and weather any U.S. recession. Sanjay Sakhrani boosted his rating to "Outperform" from "Market Perform," and expects the stock to hit $250 in 12 months, higher than his previous target of $200. The analyst also raised his 2008 earnings estimate to $7.39 from $7.05 per share -- well above the average Wall Street estimate of $6.85, according to Thomson Financial. ADVERTISEMENT "We believe the company can hold the line on revenue margins from current levels...and we believe the company's expense growth should moderate in 2008 and 2009," the analyst wrote in a note to investors. Sakhrani said his estimates for revenue margins have been consistently conservative, and that expenses in 2007 will be likely higher than in the future because of personnel expansion. The analyst also said MasterCard is "unique" because it derives 50 percent of revenues from abroad, making it less susceptible to a U.S. recession, which his research house forecasts. "The company is not directly exposed to consumer credit risk," he said. In a separate note Tuesday, the analyst cautioned that American Express Co.'s exposure to that risk "may cause earnings growth to slow somewhat." He maintained an "Outperform" rating on the stock, saying the company's "significant flexibility on expenses" leaves it with solid long-term prospects. Sakhrani is less optimistic about Discover Financial Services, cutting the stock to "Market Perform" because of the predicted recession. "We believe earnings would be negatively impacted in a mild recessionary environment," he wrote in a third note Tuesday. The analyst said Discover remains an "attractive entry point" for longer term investors.