By Senad Karaahmetovic
Shares of Visa (NYSE:V) are up about 2% in pre-open Wednesday trading after the payment-processing business reported stronger-than-expected FQ4 results.
Visa reported an FQ4 EPS of $1.93 on revenue of $7.8 billion, which is better than the FactSet consensus of EPS of $1.87 on revenue of $7.57 billion. Payment volume was up 5.2% YoY to $2.93 trillion, missing the Bloomberg consensus of $3.01 trillion.
Earnings were fueled by strong travel demand as cross-border volumes surged 36% at constant currency (CC), better than the +35.8% analyst estimate.
Visa said its board authorized a new $12 billion share buyback plan. The company also boosted its quarterly dividend to $0.45 from $0.375.
“As we look ahead, while some short-term uncertainty exists, we remain confident in Visa's long-term growth trajectory across consumer payments, new flows and value added services,” said CEO Alfred Kelly.
On the guidance front, Visa expects F23 CC revenue growth in the mid-teens, excluding the 4% and 2% headwinds from FX and Russia, respectively.
BofA analysts maintained a Buy rating as guidance came in better than expected.
“We view Visa’s ability to protect the bottom-line in nearly any macro scenario as particularly attractive in the current tape, along with the company’s resilient/diversified business model and competitive moat, as well as an enviable bal sheet/cash flow profile. V is now trading at a 39% P/E multiple premia to SPX vs. 5-yr average of 54%,” the analysts said in a client note.
Citi analysts lowered the PT to $238 from $254 per share but reaffirmed the Buy rating on V stock after a “solid” quarter and a “positive” outlook.
“While some investors might hesitate at the lack of an explicit downturn adjustment, Visa’s remarks highlight its ability to quickly adapt on the expense side to an inherently volatile environment. Meanwhile, we would note the ongoing diversification of the revenue base away from traditional consumer payments as new flows and value-added services now approach a third of revenues,” they wrote in a note.