A federal judge's call for a revised settlement from Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA) after tossing out their $30 billion antitrust settlement on June 25 should not have much of an impact on their similar business models, according to an analyst.
U.S. District Judge Margo Brodie in Brooklyn wrote on Friday that the banks could handle a "substantially" larger settlement, arguing that the deal would have "disproportionately and inequitably" benefited small, local merchants over larger retailers such as Walmart Inc. (NYSE:WMT), Bloomberg reported.
Despite Brodie's opinion, JPMorgan remained Overweight on both Visa and Mastercard on the belief that "the diversity, complexity and scale of their business models give each substantial ability to preserve overall pricing and maintain earnings growth."
"In isolation (and acknowledging a wide spectrum of outcomes) we don't find the court's commentary overly concerning and based on the memo's text we think that V/MA's economic model is unlikely to be materially impacted by a revised agreement," JPMorgan analyst Tien-tsin Huang wrote in a note on Monday.
"In our view, a worse outcome would be if an agreement cannot be made and the litigation proceeds to trial, which widens the spectrum of potential outcomes."
Also Read: Visa, Mastercard's $30B Deal Hits A Snag: Judge Signals Rejection
The initial agreement, which is aimed at resolving two decades of legal battles over credit-card swipe fees, would have let big retailers charge higher fees on Visa or Mastercard credit cards while allowing smaller merchants to use pricing tactics that steer consumers to lower-cost cards, according to Brodie's opinion.
The "cost" of the settlement is the estimated $30 billion that the merchants would end up saving over five years, the judge noted.
But Brodie further wrote in her opinion that the estimated $6 billion in annual savings to merchants is "paltry compared to the $100 billion that merchants paid" in interchange fees on Visa and Mastercard transactions last year, according to Bloomberg. The two firms could "withstand a substantially greater judgment," she said.
The judge's opinion for a revised settlement is "a net-negative for the stocks," but it does not seem as bad as other recent bear views, Huang said.
Price Action: Visa dipped 0.06% to $262.32 by Monday's mid-afternoon trading, while Mastercard declined 0.65% to $438.30.
Two exchange-traded funds that give investors exposure to Visa and Mastercard stocks saw modest gains, however, by mid-afternoon. Shares U.S. Financial Services ETF (NYSE:IYG) rose by 0.33%, while SPDR Select Sector Fund – Financial (NYSE:XLF) gained 0.21%.
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联邦法官于6月25日驳回Visa Inc. (NYSE:V)和Mastercard Incorporated (NYSE:MA)的300亿美元反垄断和解后,要求进行修改的呼吁,不应对它们类似的业务模式产生太大影响,根据分析师的说法。
布鲁克林的美国地区法官Margo Brodie周五写道,银行可以处理一个“大幅度”的更大的和解,认为该协议将“不成比例地和不公平地”使小型本地商家受益,而不是沃尔玛公司等较大零售商,彭博社报道。
尽管布罗迪持有的意见,根大通仍然重仓Visa和万事达,因为“他们的业务模式的多样性、复杂性和规模为每个人提供了保持整体定价和保持盈利增长的大量能力。” 周一,摩根大通分析师Tien-tsin Huang在一份备忘录中写道,“孤立地(并承认广泛的结果) ,我们并不认为法院的评论过分关注,根据备忘录的文本,我们认为V/MA的经济模型不太可能受到修订协议的实质性影响”。
“尽管存在各种各样的结果,我们认为法院的评论并非过分关注,根据备忘录文本,我们认为V/MA的经济模型不太可能受到修订协议的实质性影响”尽管存在各种各样的结果,摩根大通分析师Tien-tsin Huang在周一的一份备忘录中写道。
“在我们看来,更糟糕的结果将是协议无法达成,诉讼将进入审判阶段,这将扩大潜在结果的范围。”
Visa, Mastercard 300亿美元交易出现障碍:法官表示拒绝
根据布罗迪的意见,旨在解决信用卡刷卡费20年的法律纠纷的最初协议将允许大型零售商对Visa或万事达信用卡收取更高的费用,同时允许较小的商家使用定价策略,引导消费者使用低成本的信用卡。
据法官指出,“和解”的“成本”是商家在五年内可能节省的大约300亿美元。
但布罗迪在她的意见中进一步写道,相对于去年Visa和万事达交易中支付的1520亿美元的交易手续费,商家每年节省的60亿美元“微不足道”,彭博社称这两家公司可以“承受更大的判决”。
法官对改版协议的意见是“对股票的净负面影响”,但它似乎并不像其他最近的空头观点那样糟糕,黄宗津说。
价格行动:周一下午交易时,Visa的股价下跌0.06%,至262.32美元,而Mastercard的股价下跌0.65%,至438.30美元。
然而,通过下午中期,两只跟踪Visa和万事达卡股票的交易所交易基金(ETF)略有增长。其中,美国金融服务ETF(IYG)涨0.33%,SPDR选择性行业基金-金融(XLF)上涨0.21%。
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