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Visa stock target boosted, rating held on strong Q4 results

EditorNatashya Angelica
Published 10/30/2024, 09:13 AM
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On Wednesday, Piper Sandler adjusted its price target on shares of Visa (NYSE:V), lifting it to $322 from $319, while keeping an Overweight rating on the stock. The adjustment followed Visa's fourth-quarter earnings report, which surpassed expectations in several key financial metrics.

Visa's quarterly performance showed strength with higher-than-anticipated results in top line, operating profit, and earnings per share (EPS). The company's Service, International, and Other revenues exceeded Wall Street projections, although Data Processing revenue fell marginally short of estimates.

The company's management addressed the ongoing Department of Justice (DOJ) lawsuit, stating their belief that the lawsuit is without merit. They declared their intention to "defend [themselves] vigorously" against the allegations. Piper Sandler acknowledged the lawsuit as a potential risk that could limit the stock's upside until a clear resolution is reached, which might be a prolonged process.

During the quarter, Visa also reported a 22% year-over-year increase in both Value-Added Services (VAS) and New Flows revenue, which now account for over 30% of the company's total revenue. This growth is seen as a positive indicator of Visa's revenue diversification strategy.

Looking forward, Visa is expected to provide more details on its growth drivers and strategies, particularly concerning New Flows and VAS, at its investor day scheduled for February of the following year. Piper Sandler's revised price target reflects a slight increase based on the company's recent financial achievements and ongoing initiatives.

In other recent news, Visa Inc (NYSE:V). has seen its share price target raised by several firms, following a strong finish to its fiscal year 2024. TD Cowen raised its target to $325, citing a stable core business outlook and Visa's attractive risk/reward profile.

Deutsche Bank also increased its target to $340, reflecting confidence in Visa's solid fundamentals and potential for increased volume and growth. Citi raised its price target to $326, highlighting the company's consistent performance and growth in New Flows and Value Add services.

Visa reported a robust fiscal fourth quarter, with $9.6 billion in revenue, marking a 12% growth, and adjusted earnings per share (EPS) of $2.71, surpassing estimates. The company also announced a restructuring effort affecting 1,400 employees, with the savings expected to be reinvested into new hiring and growth initiatives.

Looking forward, Visa's guidance for fiscal year 2025 indicates net revenue growth in the high single to low double digits, and adjusted EPS growth at the higher end of the low double digits. Despite facing legal challenges from the U.S. Justice Department accusing it of monopolizing the debit card market, a claim Visa has dismissed, the company continues to demonstrate financial stability and growth prospects. These are the recent developments for Visa Inc.

InvestingPro Insights

Visa's strong financial performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $536.24 billion, reflecting its dominant position in the financial services sector. Visa's revenue growth of 9.7% over the last twelve months aligns with the reported 22% increase in Value-Added Services and New Flows revenue, underscoring the company's successful revenue diversification strategy.

InvestingPro Tips reveal that Visa has maintained dividend payments for 17 consecutive years and has raised its dividend for 16 consecutive years. This consistent dividend policy, coupled with a current dividend yield of 0.74%, demonstrates Visa's commitment to shareholder returns, which may be particularly appealing to long-term investors.

The company's profitability is evident from its high gross profit margin of 97.8% and operating income margin of 66.95%. These figures support Piper Sandler's positive outlook on the stock. Additionally, Visa's return on assets of 21.2% indicates efficient use of its resources, which is crucial for maintaining its competitive edge in the financial services industry.

It's worth noting that InvestingPro offers 9 additional tips for Visa, providing investors with a more comprehensive analysis of the company's financial health and market position. For those interested in a deeper dive into Visa's financials and future prospects, exploring these additional insights on InvestingPro could be valuable.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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