Bernstein Says The Market's Overreacted To Visa, Mastercard Legal News

Visa Inc (NYSE: V) shares closed 3 percent lower on July 30, while shares of Mastercard Inc (NYSE: MA) lost 4 percent, following news of the 2012 Merchant Litigation Settlement being overturned. Bernstein’s Lisa D. Ellis recommend in a report to “buy the weakness,” since the market’s reaction to the court ruling seems to be overdone.

Related Link: Visa And Mastercard See Settlement With Retailers Rejected In Court

On June 30, an appeals court voided the 2012 $7.25B antitrust settlement between Visa / MasterCard and US merchants. Analyst Lisa Ellis enumerated the reasons for the market response seeming overdone:

1. Any possible new settlement is likely after 7 to 8 years
2. Visa’s financial exposure is nominal, due to Class B shares
3. Other US merchant litigation is likely to be swept into any new class action
4. Low regulatory risk

The negative stock reaction seemed partly due to “unfortunate timing, coincident with recent lawsuits.”

“We see no material change to our theses on V & MA,” Ellis wrote, while reiterating Outperform ratings on both companies.