"Pay Double Heroes" financial report is coming this week! JP Morgan sings bullish ahead of performance: Fundamental is stable, reiterates "buy" rating for Visa (V.US) and Mastercard (MA.US)

Mastercard (MA.US) will announce its fourth quarter earnings before the US stock market opens on January 29 (Thursday), while Visa (V.US) will announce its financial report after the US stock market closes on Thursday (early Friday morning Beijing time). Prior to this, JPMorgan released a research report pointing out that despite some unfavorable factors, the fundamentals remain solid; it reiterated its "overweight" rating for Mastercard and Visa, with target prices of $685 and $430 respectively. JPMorgan pointed out that consumer data shows a slight slowdown in growth in the fourth quarter, indicating that domestic US consumers continue to remain healthy (Chase credit card data shows an increase in spending since January). In addition, the valuation of both companies is relatively reasonable, and their stock prices are predictable (with the most notable being Visa's tokenization value-added service fee starting in April), factors that lead the bank to have a generally optimistic view on the performance of both companies, though slightly favoring Visa. However, recent news in the past few weeks has exacerbated market sentiment towards the entire industry, including credit card networks. The Credit Card Competition Act (CCCA) has been a focus of market attention recently. JPMorgan believes the impact of this law on the two payment companies is unlikely to be significant but controllable. The implementation of the law may take several years, giving payment networks enough time to restructure their businesses and adjust pricing strategies based on value accumulation to offset potential mild financial impacts. JPMorgan believes that the upcoming financial reports will show a positive risk-return ratio, but acknowledges that good performance/guidance alone is not enough to completely eliminate investors' concerns. Nevertheless, JPMorgan views this market volatility as an opportunity to buy high-quality assets. CCCA Issue: Previously, Trump posted on social media encouraging support for the Credit Card Competition Act (CCCA). The law was first proposed in 2022 but ultimately did not gain widespread support. The core of the law requires most Visa and Mastercard credit cards to add an independent third-party payment network, similar to the structure of debit cards. JPMorgan believes that the law is unlikely to gain support mainly because it does not bring substantial benefits to consumers/merchants (and the operational burden required for implementing the law is disproportionate). However, even if the law is implemented, the bank believes that Visa and Mastercard will be able to cope with it, and any economic impact will likely be minor in the coming years. Mastercard Earnings Outlook: JPMorgan expects revenue/earnings per share to be slightly lower than the market consensus by about 1%. The fourth-quarter performance may be affected by currency fluctuations, as Mastercard has already revised expectations downward during the quarter. JPMorgan's expectations for fourth-quarter US transaction volume growth for Mastercard are slightly below Wall Street's expectations, as the bank assumes a 240 basis point slowdown in growth due to the transition of some Capital One business (despite overall stable consumer trends). For the 2026 fiscal year, JPMorgan's basic expectation is that Mastercard will guide low double-digit growth in foreign exchange revenue/organic income (JPMorgan expects 12% growth), which the bank believes is sufficient for the current stock price, especially considering Mastercard's attractive relative valuation. Visa Earnings Outlook: JPMorgan's expectations for first-quarter revenue/earnings per share are similar to Wall Street's expectations, but their expectations for 2026 fiscal year revenue/earnings per share are slightly higher than Wall Street's by about 1 percentage point, possibly due to currency fluctuations (JPMorgan's model shows additional income of approximately 50 basis points compared to previous expectations). JPMorgan believes that basic operating trends should remain positive in the short term, with transaction volume growth in early January indicating an acceleration, as well as growth expectations for the second half of the year. According to checks, pricing for tokenization services seems to at least partially support this trend. Combined with its attractive valuation (relative to the market and Visa's historical performance), JPMorgan believes that this quarter and the entire year will present positive risk-return ratios. The bank reaffirms its top pick for 2026. Quarterly Transaction Volume Data: Bank of America Corp(BAC.US), Citi(C.US), JPMorgan Chase(JPM.US), U.S. Bancorp(USB.US), and Wells Fargo & Company(WFC.US) - these five banks collectively represent nearly half of the US domestic transaction volumes for Visa/Mastercard - have reported payment indicators for the fourth quarter of 2025. The growth rate of transaction volume for these five issuing institutions slowed by 40 basis points (total credit card transaction volume increased by 6.2% year-on-year, compared to 6.7% in the third quarter). This significantly outperformed JPMorgan's previous consumer preview forecast (which expected a slowdown of nearly 2 percentage points) and exceeded Wall Street's expectations (V/MAU transaction volume growth slowed by approximately 1 percentage point), noting that Wall Street's expectations included the drag from the transition of Mastercard due to Capital One. JPMorgan's credit card data shows that the growth rate of transactions in January up to January 13 has accelerated, up by 130 basis points compared to the fourth quarter and up by 220 basis points compared to December last year. Revised Expectations: Given the positive data during the quarter, JPMorgan has slightly raised its near-term US transaction volume expectations, taking into account the impact of currency fluctuations. Ultimately, JPMorgan has slightly raised its revenue/earnings per share expectations for both payment companies; although Mastercard's fourth-quarter revenue reported is expected to decrease slightly due to currency impacts.