On Wednesday, Argus adjusted its outlook on Visa Inc . (NYSE:V), reducing the stock's price target to $295.00 from the previous $310.00 while still recommending a Buy rating. The revision was prompted by a deceleration in payment volumes, despite Visa's consistent performance.
Visa's adjusted earnings per share (EPS) for the third fiscal quarter of 2024, which concluded on June 30, were reported at $2.42, a rise from $2.16 in the same period the previous year, aligning with consensus expectations.
The company experienced a 7% increase in payment volume (measured in constant dollars) during the third quarter, a slight decrease from the 8% growth seen in the second quarter. Meanwhile, cross-border volume expanded by 14%, which, although robust, was a slight decline from the 16% growth in the previous quarter. This growth was supported by the ongoing recovery in international travel.
Visa's management has reconfirmed its full-year 2024 guidance, which anticipates low double-digit revenue growth and an increase in EPS in the low teens. However, in response to the impact of higher interest rates on consumer spending, Argus has revised its EPS estimates for fiscal years 2024 and 2025 downwards. Consequently, the firm has also adjusted Visa's target price to $295, which is based on a 30-times multiple of the revised EPS estimate for fiscal year 2024.
In other recent news, Visa Inc. has experienced numerous adjustments in its stock target price following its recent quarterly financial performance. BofA Securities reduced the stock's price target from $297.00 to $279.00, maintaining a neutral rating.
Analysts at Goldman Sachs and Piper Sandler held steady with their Buy and Overweight ratings respectively, albeit with slight reductions in their price targets. Mizuho reduced Visa's price target from $275 to $251, also maintaining a neutral rating.
These adjustments come in the wake of Visa's third-quarter results, which showed net revenues of $8.9 billion, slightly below the anticipated $9.0 billion. The company's growth in U.S. volume was reported at just +5%, a figure that is not expected to surpass the growth of Personal Consumption Expenditures (PCE) for the quarter.
Despite these results, Visa projects low double-digit adjusted net revenue growth for the fourth quarter and the full year. The company's Value-Added Services (VAS) and New Flows revenue saw year-over-year increases of 23% and 18%, respectively, indicating areas of robust growth. These are among the recent developments concerning Visa Inc.
InvestingPro Insights
As Visa Inc. navigates a changing economic landscape, investors can gain additional context through InvestingPro data and tips. With a substantial market capitalization of $510.25 billion, Visa stands as a dominant force in the financial services sector.
Its Price/Earnings (P/E) ratio, sitting at 27.26, may appear elevated when considering near-term earnings growth, which is a point of consideration for those looking at the company's valuation. Moreover, Visa has demonstrated a commitment to shareholder returns, having raised its dividend for 16 consecutive years, and this trend is reflected in the dividend growth of 15.56% over the last twelve months as of Q2 2024.
InvestingPro Tips highlight that, despite a high P/E ratio, Visa's stock generally trades with low price volatility, which might appeal to investors seeking stability in their portfolios. Moreover, the company's cash flows have been more than sufficient to cover interest payments, indicating financial robustness.
For investors interested in further analysis and additional tips, there are 7 more InvestingPro Tips available, offering deeper insights into Visa's financial health and market position. To access these, consider using the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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