Visa Tops Q1 Earnings Estimates; Shares Gain on Buyback Plan

Visa Inc, the world’s largest card payment company, reported better-than-expected profit in the first quarter of 2021 as payments volume, cross-border volume and processed transactions growth recovered from the previous quarter.

The global technology payment company said its net income dipped to $3.13 billion, or $1.42 a share, down from $3.27 billion, or $1.46 a share a year earlier. On an adjusted basis, Visa reported a profit of $1.42 per share, down from $1.46 seen in the same period a year ago. However, that higher than the market consensus estimates of $1.28 per share.

Visa’s total revenue came in at $5.69 billion, down from $6.05 billion a year earlier but that was better than the Wall Street estimate of $5.52 billion.

Visa’s (V) F1Q results came in ahead of our estimates/consensus, with key metrics improving sequentially. In January processed transactions and cross-border volumes remained stable, while US payment volumes continued to improve led by debit. That said, many countries ROW experienced a slowdown in cc payment volume. While we are lowering our F2Qrevenue estimate, we are still forecasting a 2H21 rebound,” said George Mihalos, equity analyst at Cowen and Company.

The company also authorized a new $8.0 billion share repurchase program, bringing total funds available for share repurchase to over $11 billion.

That helped Visa shares to rise as high as 2% in extended trading on Thursday; the stock surged above 16% in 2020.

Visa Stock Price Forecast

Twenty-two analysts who offered stock ratings for Visa in the last three months forecast the average price in 12 months at $235.95 with a high forecast of $270.00 and a low forecast of $204.00.

The average price target represents a 19.03% increase from the last price of $198.22. From those 22 analysts, 19 rated “Buy”, three rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $233 with a high of $258 under a bull scenario and $148 under the worst-case scenario. The firm currently has an “Overweight” rating on the payment company’s stock.

Several other analysts have also recently commented on the stock. Cowen and company raised the target price to $226 from $221. Credit Suisse upped the price objective to $265 from $255. Compass Point increased the stock price forecast to $240 from $230. Keybanc lowered the target price to $210 from $225. Citigroup raised the price target to $239 from $230.

Analyst Comments

Visa (V) is one of our preferred stocks, as it is a key beneficiary of resilient global consumer spend growth, the ongoing shift from cash to electronic payments, and broadening merchant acceptance. Global Personal Consumption Expenditure and secular growth drivers should support low double-digit revenue growth in the near-to-medium term,” said Michael Cyprys, equity analyst at Morgan Stanley.

“While COVID-19 headwinds are likely to persist, we see upside opportunity from the faster-than-expected recovery of travel. Continued investment in longer-term initiatives (faster payments, P2P, B2B) and partnerships continue to increase its TAM and offer an opportunity for compounding double-digit earnings growth for the foreseeable future.”

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