Mastercard’s expanded holiday retail sales excluding automotive and gasoline grew 3%, according to Mastercard SpendingPulse, the market intelligence platform that provides national retail sales data across all payment types.
Steve Sadove, senior advisor for Mastercard (MA), said, “American consumers turned the holiday season on its head, redefining ‘home for the holidays’ in a uniquely 2020 way. They shopped from home for the home, leading to record e-commerce growth.”
U.S. consumers shopped much earlier than in previous years, as retailers offered special promotions early and often.
Mastercard’s expanded holiday season, from October 11 to December 24, saw online sales grow 49% compared to the same period last year. E-commerce for the year accounted for almost 20% of total retail sales, compared to around 13% in 2019, highlighting the shift in consumer behavior.
The strongest growth sector compared to 2019 was ‘Home Furniture and Furnishings’, which grew 16%, with online sales growing 31%. As consumers are spending more time at home, the ‘Home Improvement’ sector grew 14%, with e-commerce sales up 80% year-on-year.
The ‘Apparel’, ‘Department Stores’ and ‘Jewelry’ sectors all experienced negative growth year-over-year. However, online sales in these sectors still increased as consumers were forced to change their shopping habits due to the coronavirus pandemic.
Seaport Global analyst Chris Brendler initiated a Buy rating on the stock three weeks ago, setting a price target of $370 (10% upside potential). Brendler named Mastercard one of his “favorite payments stocks,” and a major beneficiary of consumers’ cashless preferences. He sees “material earnings upside” for Mastercard once travel returns.
Consensus among analysts is a Strong Buy based on 14 Buys and 2 Holds. The average price target of $353.69 implies upside potential of around 5% over the next 12 months.
Mastercard shares are up around 13% year-to-date.