The share price of MasterCard Inc. fell Thursday after the company was downgraded.
Wells Fargo & Co. senior analyst Timothy Willi reduced his rating on the Purchase, N.Y., payments company to "market perform," from "outperform," largely on valuation concerns.
Though MasterCard's fundamental outlook remains strong, Willi wrote in a research note, the "shares offer limited near-term upside" because they trade above $250 and are closing in on his target range of $270 to $280.
At midday Thursday, MasterCard shares were trading at $252.08, down 1.36% from the Wednesday closing price.
"We continue to hold a positive long-term view of MA and consider its fundamentals/competitive positioning to be among the strongest in our universe," Willi wrote.
However, he also said the strong performance of MasterCard's stock in the past year "has moved it to a position where it now fairly reflects" the company's fundamentals.
Looking forward, Willi said that MasterCard's "strong competitive positioning in the attractive global payments industry should result in sustainable" earnings that will probably be "well above its transaction-processing peers' and the market as a whole."
MasterCard shares reached a 52-week high of $259 last month.
Willi said that he expects global transaction-volume growth of about 10% at MasterCard "once economic conditions improve." Combined with higher ticket prices, "we believe MA can grow net revenue by 10% to 15% over the next several years," which could make MasterCard's earnings growth "among the strongest in our universe" of payments companies.