Back to top

Analyst Blog

On Jul 9, 2013, Zacks Investment Research upgraded Visa Inc. (V - Analyst Report) to a Zacks Rank #2 (Buy).

Why the Upgrade?

The Zacks Consensus Estimate for Visa increased to $7.48 from $7.45 in the last 60 days. The increase was driven by upward estimate revisions.

The card giant delivered earnings surprise in all the last 4 quarters with an average beat of 4.7%. We expect the trend to continue when it reports its fiscal third-quarter results. The Zacks Consensus Estimate for Visa’s fiscal third-quarter stands at $1.78, translating to a 14.4% year-over-year increase.

Visa enjoys an industry leading position among its peer group with respect to total payments volume, total transactions and total number of cards in circulation. Further, strong brand value, sturdy balance sheet, and the increasing demand for electronic payment services are the other positives. Moreover, Visa continues to grow organically through a healthy product boutique and huge network.

Visa also follows an inorganic route to boost its growth profile. The acquisitions of CyberSource, PlaySpan and Fundamo along with strategic alliances with JPMorgan Chase, Samsung, Bank of America, QIWI, Obopay, Orange, Intel, Vodafone, Samsung, Isis, Monitise, CashEdge and Fiserv complement Visa’s latest eCommerce and mCommerce growth strategies. These pacts also help the company reach out to the banked and unbanked consumers in developing nations, which should further aid in driving its non-U.S. revenue share to about 50% by 2015

Additionally, Visa enjoys a strong cash and available-for-sale investment position along with strong free cash flow reserve, posing a risk-free balance sheet.

Other Stocks to Consider

Other stocks worth considering in the financial transaction services business are Heartland Payment Systems, Inc. (HPY - Snapshot Report) – Zacks Rank #1 (Strong Buy), Official Payments Holdings, Inc. (OPAY) – Zacks Rank #1 (Strong Buy) and MasterCard Inc. (MA - Analyst Report) – Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.