Industrials

BofA sees a potentially more volatile regulatory landscape as well as limited valuation upside Shares of Visa Inc. and Mastercard Inc. mostly draw buy ratings from Wall Street analysts. But BofA Global Research’s Jason Kupferberg broke from the pack on Wednesday as he downgraded both payment-technology stocks to neutral. He noted an “arguably … more volatile and unpredictable” regulatory landscape in the wake of a judge’s “unexpected” decision to reject the companies’ landmark deal in a long-running merchant suit. “Historically, we (and the investment community in general, based on investors with whom we’ve spoken) have largely treated [Visa and Mastercard] regulatory developments as no more than modest headline risk,” he wrote. But Visa and Mastercard now must contend with dynamics such as revising or going to trial over the merchant agreement and fending off the proposed Credit Card Competition Act with this new, unpredictable backdrop. Additionally, regulatory developments could make

Visa (V) and Mastercard (MA) could face elevated regulatory activity that could limit multiple expansion, BofA Securities said in a Wednesday note as it downgraded the credit-card companies to neutral from buy. “Historically, we have largely treated [Visa and Mastercard] regulatory developments as no more than modest headline risk,” the firm said. “However, as the recent unexpected rejection of the proposed merchant litigation settlement illustrates, the regulatory environment has arguably become more volatile and unpredictable.” BofA said that some of the regulatory items to monitor include next steps in merchant litigation, the proposed Credit Card Competition Act and the Fed’s final decision on lower regulated debit interchange rates. The firm added that the two companies remain relatively “crowded” longs for long-only and hedge-fund investors. BofA said it continues to have a favorable view on the companies’ “premier business model and competitive moat.” Shares of Visa were down 1.5% and shares

Visa (V) and Mastercard (MA) voluntarily agreed to extend maximum swipe fees on non-EU credit and debit card transactions in Europe until 2029, the European Union’s main antitrust regulator said Friday. Visa and Mastercard opted to continue to maintain a 0.2% fee cap on non-EU debit card payments and 0.3% on credit card payments within the 27-member states of the European Union, the European Commission said. For online or telephone transactions, the caps will remain at 1.15% for debit cards and 1.5% for credit cards, the European Commission