Visa is seeing enough of a recovery to line up more bullish calls on Wall Street.
The company reported quarterly results on Tuesday that exceeded the consensus forecasts for revenue and earnings. Revenue was $5.7 billion, 3.2% higher than expected, while earnings per share of $1.38 came in ahead of the consensus of $1.27 among analysts tracked by FactSet.
Visa (ticker: V) stock was moving higher Wednesday, gaining around 2% in early trading to $234. The Dow component has been a laggard this year, however, gaining 7% versus an 11% gain for the Dow Jones Industrial Average.
The company struck an upbeat tone on a call with analysts. “We believe we’re at the beginning of the end of the pandemic and the recovery is well under way, at least in a number of markets,” CEO Alfred Kelly said.
Several brokerages raised their targets for the stock price. Morgan Stanley (MS) increased its target from $258 to $279. Credit Suisse (CS) lifted its target to $280, and Raymond James Financial (RJF) bumped its estimate to $268.
Mizuho Securities’ Dan Dolev raised his price target to $275 and reiterated a Buy rating on the stock. Visa’s U.S. payments volume in April was up 29% from April of 2019, while debit was up 51%, he noted. And growth accelerated sequentially from March by 5 percentage points.
Also encouraging, Dolev said, was that Visa’s “crypto strategy is unfolding nicely.”
Consumers can now use a Visa debit card linked to a crypto-wallet to make a purchase: Visa converts the cryptocurrency to dollars or another legal tender. The company is working with crypto-exchanges and wallet providers such as Coinbase Global (COIN), Crypto.com, and BlockFi.
Susquehanna Financial analyst James Friedman was also impressed with Visa’s report, raising his target to $265 from $250. “April looks great with a surge in Card Present and even Travel, and the guidance is good, with green shoots stronger than we would have had expected,” he wrote in a note.
Still, there were some blemishes in Visa’s report.
The company highlighted a 16% increase in payments volume and transactions compared with the first quarter of 2019, before the pandemic hit. However, cross-border payment volumes outside Europe remained down 25% due to continuing steep declines in international travel and commerce.
Cross-border payments and transactions are high-margin businesses for Visa, but the recovery remains slow. Overall, cross-border payments volume was down 11% compared with the year-earlier level.
Visa’s financial forecasts, while encouraging, fell short of some forecasts. The company declined to give a full fiscal-year outlook and said it expects revenue growth in the “high teens” in its fiscal third quarter, the second quarter of 2021.
MoffettNathanson analyst Lisa Ellis, who was looking for 25% growth in the quarter, said that outlook may result in a “lukewarm reaction” among investors. She maintained a Buy on the stock, however, and slightly increased her estimates for 2022 earnings. She kept her target at $270.
Guggenheim’s Jeff Cantwell maintained a Neutral rating on the stock. While he raised his estimates for earnings in fiscal 2021 and 2022, he maintained a Neutral rating on the stock, saying it was already fairly valued.
Write to Daren Fonda at [email protected]