Net revenue of US$1.45-billion and adjusted earnings per share of US52¢ per share on stronger-than-expected payments volume and global transactions from Visa Inc. marked the company’s first earnings report as a public company.
But it may not be enough to calm investor fears about the U.S. economy as shares of the world’s largest credit and debit processor were down nearly US$3 in pre-market trading on Tuesday.
Nonetheless, RBC Capital Markets analyst Cynthia Houlton remains bullish on Visa, hiking her price target to US$84 from US$80 after the results. She told clients that while Visa has identified several cost-cutting opportunities, it will also invest in growth.
Visa has more than US$5-billion in cash on its balance sheet, US$40-million in long-term debt and an annual dividend of US42¢ that Ms. Houlton said could increase over time.
Visa shares have risen more than 70% since the IPO at US$44 in March.
Goldman Sachs analyst Elizabeth Grausam, who has a “buy” rating and US$90 price target on the stock, said Visa should continue to command a healthy premium and near-term fluctuations should be used as buying opportunities “while the Street settles into a more consistent view on earnings expectations.”
While Visa has seen its price rise by more 30 points over the last month, looking technically at Visa and Mastercard, both seem to have more potential upside since they are best of breed credit card companies. Visa and Mastercard have essentially the same business and Visa will likely follow Mastercard’s appreciation movement. Below is some technical analysis on each.
