Visa (V) is a digital payments company providing transactions between institutions, customers, merchants, and banks.
I am bullish on the stock. (See Analysts’ Top Stocks on TipRanks)
Recent Controversy
Amazon (AMZN) has barred U.K. Visa credit card usage from its platform due to the apparently exorbitant transaction fees Visa charges to its clients.
According to an Amazon spokesperson: “These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.”
This is likely a bit of a non-event; it’s more of a case where Amazon is exercising its bargaining power, and it’s doubtful that Visa will experience long-term implications from this situation.
According to Visa’s CFO, Vasant Prabhu: “We’ve resolved these things in the past, and I believe we’ll resolve them in the future.”
Another issue that investors are concerned about is the rising COVID-19 cases in Europe. When looked at objectively, the company has shown that it can cope with pandemic restrictions; as a matter of fact, Visa has benefited from COVID’s online shopping surge and has produced a 10.34% year-over-year increase in revenue.
Stellar Q4 Results
The digital payments pioneer produced stellar results in its Q4 report, which got released in October.
Visa beat its revenue target by $50 million and its EPS target by $0.08. The firm managed to benefit from its diverse range of revenue streams and increases in consumer spending during a period of quantitative easing.
To break the quarter down into further detail. Visa’s payment volume rose by 17%, its cross-border volume rose by 38%, and processed transactions increased by 21%.
Key Metrics
From an investors’ vantage point, Visa is in great shape. The firm managed to produce 45.9% in year-over-year gains in operating cash flows, increasing its intrinsic value significantly.
Furthermore, Visa’s ROE and EPS ratios are anticipated to grow by 12.9% and 18.7% within the next year, which could spur on the stock’s growth.
Wall Street’s Take
Analysts across Wall Street remain adamant that Visa is a Strong Buy. All 14 analysts who’ve covered Visa stock have placed Buy ratings on the asset with an average price target of $277, which represents upside worth 36.3%.
Concluding Thoughts
Visa stock should be able to shake off the recent controversy surrounding its Amazon partnership and COVID speculation. The company is in great shape, and so is its stock.
Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.
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