Analysts at Wedbush have awarded an ‘Outperform’ rating and US$270 price target to Visa after the San Francisco-based payments and processing technology company swiped a second-quarter earnings beat after the bell on Tuesday.
The analyst noted that Visa’s revenue of $8 billion and adjusted earnings per share of $2.09 had exceeded the Street’s expectations, with growth driven by the uptick in non-US volume rates and value-added services.
“As we expected, intra-quarter US-based volume growth moderated during the quarter, offset by sustained strength in Europe, LatAm and APAC,” the analysts wrote in a note to clients.
“Per management, the dip in purchase volumes started in March, reflecting a 2% decline in average ticket price, remaining at current levels through April 21st. This compares to a 1% ticket price increase in January and February.
“This reflected the impact of moderating inflation rates, declining gas prices, retail discounting, and an 11% year-over-year decline in tax refunds.”
Non-US purchase volume growth remained strong, driven by LatAm (27%), Europe (ex-UK up 31%), and APAC (17%), the analysts highlighted.
They noted management’s commentary regarding opportunities in three areas, including consumer payments, new payment flows, and value-added services.
“Q3/FY23 guidance, now factors low double-digit credit card net revenue growth (with 100 basis points of F/X headwinds), with strength in non-US regions offsetting the volume dip in the US,” they wrote.
“Management continues to expect overall growth to slow in the second half of FY23, while also factoring higher client incentives. We believe the Street’s expectations already factor this scenario.”
Visa shares were trading modestly higher following its results, up 0.4% at US$230.44 early on Wednesday afternoon.
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