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Valued at $597.3 billion, Visa (V) is a multinational payment technology company. Its branded credit, debit, and prepaid cards allow for global electronic funds transfers. Unlike traditional banks, Visa does not offer savings accounts, set interest rates, or extend credit; instead, it makes money from transaction fees, data processing, and other value-add services.
Founded in 1958, Visa has consistently delivered robust results, driven by its dominance in digital payments and a growing global presence. Between fiscal 2014 and fiscal 2024, Visa’s earnings have increased at a compounded annual growth rate (CAGR) of about 17.8%. Rising consumer spending and increased adoption of digital payments have driven this growth and may continue to do so.
Visa stock has risen roughly 23% in the year-to-date, compared to the S&P 500 Index’s ($SPX) gain of 25%. Recently, Goldman Sachs has given the stock a high target price of $403, which implies potential upside of 25.6%. Can Visa hit this target? Let’s find out.
Fiscal 2024 Was a Good Year for Visa
Visa had a successful fiscal year in 2024, despite ongoing geopolitical tensions and challenging macroeconomic conditions. The recovery of international travel following the global pandemic has increased Visa’s cross-border transaction volumes. Cross-border payments, which typically have higher fees, contribute significantly to Visa's revenue.
In fiscal 2024, adjusted earnings per share (EPS) increased 15% year-over-year to $10.05, driven by a 10% increase in net revenue to $35.9 billion. Payment volume and cross-border transactions increased by 8% and 10%, respectively.
The company also intends to acquire Featurespace, a developer of real-time artificial intelligence (AI) payment protection technology that will help safeguard Visa against payment fraud and financial crime. The transaction is expected to close in fiscal 2025.
Visa Is a Healthy Dividend Stock
Although Visa has been around for a long time and is considered a mature company, it can also be classified as a growth stock. As the digital finance market continues to grow rapidly thanks to AI and other technological advancements, Visa has ample long-term opportunities and the financial capacity to expand.
The cherry on top is that Visa also pays dividends. Its forward yield of 0.74%, compared to the financial sector average of 3.18%, is not particularly appealing. However, income-seeking investors may find its aggressive dividend increases tempting. Visa recently raised its quarterly cash dividend by 13% to $0.59 per share. It has consistently increased dividends over the last 17 years. Its low forward payout ratio of 21.08% implies that the company can maintain dividend payments based on current earnings, with the possibility of future increases.
Analysts covering Visa expect earnings to increase by 11.6% in 2025 and around 13% in fiscal 2026. Visa stock is trading at 25.3x forward 2026 earnings, compared to its five-year historical earnings multiple of 34.5x.
Despite continued investments in AI to boost earnings and strategic partnership deals, Visa’s balance sheet exhibits strength and resilience. At the end of the fourth quarter, Visa had $17.7 billion in cash, cash equivalents, and investment securities.
Is Visa Stock a Buy On Wall Street?
Overall, Wall Street rates Visa stock as a “Strong Buy.” Out of the 36 analysts covering the stock, 27 rate the stock a “Strong Buy,” while three rate it a “Moderate Buy” and six rate it a “Hold.” The average target price for V stock is $335.51, which implies upside potential of 4.5% from current levels.
Recently, a BMO Capital analyst raised their price target to $350, while an Oppenheimer analyst raised it to $375, both maintaining a “Strong Buy” rating.
Separately, Goldman Sachs analyst Daniela Costa initiated coverage on Visa stock with a “Hold” rating and also assigned the high price estimate for the stock of $403.
The Bottom Line on Visa Stock
Visa is a resilient company. Furthermore, Visa continues to benefit significantly from the global shift toward digital and mobile payments. According to MarketsandMarkets, the global digital payments market is expected to reach $193.7 billion by 2028, growing at an 11.8% CAGR. With cash usage declining, particularly in emerging markets, Visa's AI investments, expansion into emerging markets, and strategic partnerships position it well to capitalize on the trend.
I believe Visa's stock will reach its high price estimate of $403 by next year. I also believe Visa is an attractive investment opportunity not only for the coming year, but for the next decade.
