On Monday, Morgan Stanley slashed the price target of Visa and Mastercard, while maintaining them with an "Overweight".
Morgan Stanley lowered the price target of Visa from $291 to $282. Meanwhile, the price target of Mastercard was cut from $457 to $441 per share.
Analysts explained that they cut the estimates, reflecting FX headwinds resulted from large international exposure.
According to them, Visa and Mastercard earn more than half of their revenues from the international market. Therefore, the shock that the currency market has faced recently could result in lower estimates, all other things being equal.
Morgan Stanley estimates show that Visa and Mastercard's currency baskets for 2023 are now 200-300 basis points weaker since last earnings. The "expanded list of currencies" includes the rest of the countries the companies operate in, and they affect results as well.