In the wake of its third-quarter earnings report, MasterCard was cut from outperform to peer perform at Bear Stearns. The stock gained nearly 21% in Wednesday's trading as investors cheered the better-than-expected profit news, and Bear Stearns warned that the stock is now trading close to its year-end price target of $188 per share (the stock closed yesterday at $189.91).
Given the volatility of MasterCard shares, said the broker, we expect a more attractive purchase opportunity soon.
Analysts are, by and large, betting against MA. Zacks reports 5 buy or better ratings, compared to 10 holds and 1 sell. On the other hand, option traders feel optimistic toward the shares; its Schaeffer's put/call open interest ratio is 0.53, as calls nearly double puts among near-term options. However, the bulk of that call open interest in the front-3 months' series lies at in-the-money strikes, so MA may not encounter too much options-related resistance as it attempts to climb higher.