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Ahead of the Bell: MasterCard upgraded

NEW YORK (AP) — An analyst raised his rating and price target for MasterCard on Friday, saying he believes the consumer spending pullback is starting to stabilize.

During the recession many consumers worried about economic volatility, high unemployment and an unstable housing market began to rein in their spending. Now that the housing market is showing some signs of improvement and unemployment is not worsening, shoppers are beginning to spend a bit again.

Donald Fandetti of Citi Investment Research said in client note that MasterCard Inc.'s global spending data showed stabilization in July and August after realizing a decline in the second quarter. The analyst said that a majority of consumers around the world still pay for things with cash or by check, but that they are increasingly starting to use credit cards more for purchases.

Fandetti also believes that the proposed $7.25 billion settlement that Visa Inc., MasterCard and major banks have agreed to pay retailers for alleged fee fixing will receive preliminary approval despite pushback from some large retailers like Wal-Mart Stores Inc. and Target Corp.

The analyst lifted MasterCard's rating to "Buy" from "Neutral" and raised its price target to $525 from $437.

MasterCard shares finished at $454.18 on Thursday. They peaked for the year at $466.98 on May 1. They traded as low as $293.01 last October.

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