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Visa Inc. (V), headquartered in San Francisco, California, operates a retail electronic payments network and manages global financial services. Valued at $469.01 billion by market cap, the leading digital payments company also offers global commerce by transferring value and information among financial institutions, merchants, consumers, businesses, and government entities.
Shares of this digital payments giant have underperformed the broader market over the past year. V has gained 8.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17%. In 2024, V stock is down marginally, while the SPX is up 9.8% on a YTD basis.
Narrowing the focus, V’s underperformance looks more pronounced compared to the S&P 500 Financials Sector SPDR (XLF). The exchange-traded fund has gained about 18.8% over the past year. The ETF’s 10.3% returns on a YTD basis outshine the stock’s marginal losses over the same time frame.
On Jul. 24, V shares fell more than 4% after its Q3 revenue of $8.90 billion, slightly missing Wall Street estimates of $8.92 billion. Its adjusted EPS of $2.42 was in line with analysts’ expectations. V processed $3.33 trillion in transactions on its network during the quarter, up 7.4% year over year. Much of the payments growth came from Europe and Latin America, but U.S. payments grew 5.1% year over year, which is faster than U.S. economic growth. The company also reported that credit and debit card payment volumes growth declined from 8% to 7% on a constant-dollar basis.
V's overall performance can be attributed to the decline in disposable income for lower-spending consumers. This has led to reduced spending, particularly on higher-priced and non-essential items, which has slowed overall consumer spending growth.
For the current fiscal year, ending in September, analysts expect V’s EPS to grow 13% to $9.91 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 34 analysts covering V stock, the consensus rating is a “Strong Buy.” That’s based on 25 “Strong Buy” ratings, four “Moderate Buys,” and five “Holds.”
This configuration is more bullish than three months ago, with 23 suggesting a “Strong Buy.”
Recently, Barclays analyst Ramsey El Assal maintained a “Buy” rating on V stock and set a price target of $319, implying a potential upside of 24.4% from current levels.
The mean price target of $303.44 represents an 18.3% premium to V’s current price levels. The Street-high price target of $330 suggests an ambitious upside potential of 28.7%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
