Analysts Raise Visa’s Price Targets after Earnings Beat



Visa (V) reported its third-quarter earnings after the markets closed yesterday. The company’s adjusted EPS for the quarter were $1.37. It beat analysts’ consensus earnings estimates of $1.32 per share. The adjusted EPS rose 14% YoY. On a constant-dollar basis, the adjusted EPS grew approximately 18% YoY. Visa’s revenues of $5.8 billion also exceeded estimates for the quarter. The revenues rose 11% YoY. Despite the earnings beat, the stock fell approximately 0.5% in after-hours trading yesterday. Visa stock has risen 37% in 2019 and is trading close to its 52-week high.

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Growth in key metrics

All of Visa’s key operational metrics showed growth during the quarter. Payments volume rose 9% YoY in constant dollars. Cross-border volume grew 7% YoY. At the same time, processed transactions grew 12% YoY. All these contributed to Visa’s earnings growth for the quarter. Visa’s service revenue grew 10% during the quarter. Its data processing revenues rose 13% and international revenue increased 8% YoY.

Visa’s key initiatives

Visa continued to expand, innovate, and launch new offerings during the quarter. Key initiatives included the acquisitions of Verifi, Rambus Payments Portfolio, and Earthport. The company expects to continue to enter new partnerships in the next quarter. “Our pipeline of partnerships is robust, and we expect to sign several other significant renewals and new deals in the remainder of this fiscal year,” noted Al Kelly, Visa’s chair and CEO, in the company’s earnings call.

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Visa’s 2019 outlook

Visa expects low double-digit growth in annual revenues for the fiscal year 2019, which includes approximately 1.5% of negative foreign currency impact. At the same time, Visa expects around a 1% positive impact from changes in the accounting standard. Visa expects adjusted EPS growth of mid-to-high teens for the year.

Analysts’ price targets for Visa after earnings

Credit Suisse, KBW, J.P. Morgan, and Citigroup raised their respective price targets for the stock after Visa’s earnings announcement yesterday. J.P. Morgan raised its price target for Visa from $166 to $182. KBW raised its price target for Visa from $203 to $208. Credit Suisse raised its price target for the stock from $200 to $203. Similarly, Citigroup raised its price target for the stock from $206 to $209.

Of the 39 Reuters-surveyed analysts covering Visa, 35 analysts rate it as a “buy,” and the remaining four analysts rate it as a “hold.” The median price target for Visa is $195.


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