Visa or Mastercard: Which sets up better for 2026? Jefferies weighs in

Jefferies projects Visa (V) to have a more favorable near-term outlook through FY26 compared to Mastercard (MA), anticipating Visa's constant-currency revenue growth to exceed 10% driven by pricing tailwinds, slower client incentive growth, and strong value-added services (VAS) expansion. While Mastercard retains a long-term advantage, it faces near-term headwinds from de-conversions and portfolio shifts, which are expected to narrow its current 21% valuation premium over Visa as their revenue growth gap is projected to shrink significantly in FY26. Jefferies maintains Buy ratings on both stocks, with price targets of $410 for Visa and $675 for Mastercard.

Analysis

According to a Jefferies research note, Visa (V) presents a more favorable near-term investment setup through fiscal year 2026 compared to Mastercard (MA), despite Mastercard retaining a stronger long-term outlook. Visa's FY26 constant-currency revenue growth is projected to be just over 10%, driven by significant pricing tailwinds and slowing growth in client incentives. This growth could approach 11% if its value-added services (VAS) segment grows at 20% instead of the 18% base case, a plausible scenario given its recent 26% year-over-year VAS growth in Q2. Conversely, Mastercard faces near-term headwinds from the Capital One debit de-conversion and the Lloyds U.K. credit portfolio loss to Visa, which are expected to slow its U.S. growth to around 4% in early 2026 and decelerate overall revenue growth from 13-14% in 2025 to approximately 11.5% in 2026. This dynamic is expected to cause a compression in Mastercard's valuation premium over Visa, which currently stands at 21% versus a five-year average of 17%, as the revenue growth gap between the two companies narrows from 2-3 percentage points in FY25 to just 0.5-1.5 percentage points in FY26.

Key Decisions for Investors

• Investors may consider favoring Visa over Mastercard for near-term capital allocation, as the anticipated compression of Mastercard's historically high 21% valuation premium presents a relative value opportunity.
• For Visa, monitor value-added services (VAS) growth as a key performance indicator, since expansion beyond the projected 18% for FY26 serves as a direct catalyst for upside to revenue estimates.
• Holders of Mastercard should assess whether its premium valuation adequately reflects the upcoming headwinds from contract losses and revenue deceleration, which pose a risk to its stock performance relative to Visa in the medium term.