Fly Intel: What to watch in credit card space earnings reports

American Express (AXP), Visa (V) and MasterCard (MA) are scheduled to announced quarterly results on July 23, 27 and 29, respectively. What to watch for: 1. SUBSTANTIAL BOOST TO PROSPECTIVE GROWTH: Evercore ISI analyst David Togut has added both Visa and MasterCard to his 2021 Top Payments Picks List and to the firm's Tactical Outperform List ahead of quarterly results. The analyst is encouraged by the "sharp improvement" in his proprietary global stringency scores for both based on his most recent bi-weekly Global Air Travel Tracker. Togut reads this as a signal for a substantial boost to prospective growth for each company's "long depressed" cross-border revenue. Earnings from the largest U.S. Visa- and MasterCard issuing banks last week evidenced better than expected U.S. credit card payment volume growth, setting the stage for potentially sustained beat-and-raise reports from the card companies, Togut argued. 2 2. EARNINGS BEAT EXPECTED: Last week, Wells Fargo analyst Donald Fandetti raised the firm's price target on American Express to $200 from $185, while keeping an Overweight rating on the shares ahead of quarterly results. The analyst expects to see earnings beats and positive estimate revisions for most of the card companies in his coverage. The networks are benefiting from reopening spend in the U.S. and slowly improving cross border, while issuers should have hefty reserve releases and slowly improving loan balances, Fandetti contended. He sees the recent market pullback around growth fears, bond yields and Delta variant as an opportunity to build positions as the broader recovery thesis remains intact. 3. CRYPTOCURRENCY: Visa is partnering with over 50 cryptocurrency firms, including Coinbase (COIN), to allow users to convert and spend digital currencies, Business Insider's Isabelle Lee reported earlier this month. "The merchants don't have to change anything," Cuy Sheffield, Visa's head of cryptocurrency, told Insider. "It will be the same as any other Visa transaction to them. But on the backend, the crypto assets are instantly converted into fiat." Meanwhile, Mastercard announced it will enhance its card program for cryptocurrency wallets and exchanges, making it simpler for partners to convert cryptocurrency to traditional fiat currency. "Working with Evolve Bank & Trust and Paxos Trust Company and Circle, Mastercard and its partners will test this new capability to enable more banks and crypto companies to offer a card option to people wanting to spend their digital assets anywhere Mastercard is accepted," the company said. 4. INDIA BAN: India's decision to ban Mastercard due to its non-compliance with data storage rules has concerned the country's financial sector because, due to Mastercard's large presence in the Indian market, it will disrupt the banks' card offerings and hit revenues, Nupur Anand and Aditya Kalra of Reuters reported, citing payment and banking industry executives. Businesses will need to sign new commercial deals with rivals such as Visa, a process which can take months, five payment and banking executives told Reuters. The decision is also considered a major setback for Mastercard, which sees India as a key market for the company.