Consumer Finance: Bank earnings offer positive readthrough for ConFin / Payments

Research evidence excerpt

Consumer Finance: Bank earnings offer positive readthrough for ConFin / Payments

get multiple is roughly in line with both the 1yr and

5yr average STM P/E multiples that shares of MA have traded at historically. This

multiple represents a premium to the S&P 500 NTM P/E multiple of approximately 22x,

which we view as justified given Mastercard's growth profile, deep moat, increasing and

geographic diversification, execution track record, and large addressable market

opportunity.

Downside risks are 1) weak consumer spending in the event of a macroeconomic

downturn, 2) increased customer concentration and consolidation, 3) legislative and

regulatory changes, 4) potential litigation settlements, which could include monetary

damages, and/or result in changes in business practices, 5) loss of customer contracts

due to increased competition or new entrants, including local/global payment networks,

new start-ups and existing large and small technology companies, and 6) large

fluctuations in the value of currencies/foreign exchange rates 7) AI disintermediation,

which includes AI agents routing transactions off of the network 8) Real time payment

networks gaining share and taking payments off of MA rails 9) Geopolitical instability

given MA's exposure to global travel corridors and pressure from higher prices.

Rocket Companies, Inc. (RKT)

Our $18 PO is based on a 18x PE multiple to our 2027 EPS forecast. An 18x PE multiple

is above mortgage comps currently and the historical range for mortgage originators.

We think the premium is warranted given expectations for a larger market prospectively,

attractive recent acquisitions, as well as for RKT's superior technology and brand.

Downside risks to our PO are 1) lower-than-forecast origination volumes or gain-on-sale