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Visa’s U.S. Payment Volumes Slip In February; Street Remains Bullish

Visa announced that total U.S. payment volumes rose 9% in February, which is lower than the 11% growth registered in January, due to unfavorable weather conditions and a lower benefit from stimulus-related spending.

While the growth rate decelerated slightly, Visa (V) said that the improvement in February’s payment volumes was due to a 22% rise in Debit volumes and a 4% decline in Credit volumes.

Furthermore, total cross-border volumes declined 16% year-over-year in February, showing an improvement over January’s decrease of 21%. Cross-border volumes excluding intra-Europe transactions declined 26% year-over-year in February but improved from a 32% decline in January.

The company said, “This improvement was due to card not present excluding travel volume growth accelerating to 27% as well as the lapping of lower 2020 travel related cross-border spend.”

Global processed transactions rose 2% year-over-year in February, but were 1% lower than in January, due to adverse weather conditions in the U.S. and restrictions amid the COVID-19 pandemic. (See Visa stock analysis on TipRanks)

Visa reported better-than-expected 4Q results in January, where earnings of $1.42 per share came in ahead of analysts’ estimates of $1.28. Revenues of $5.7 billion also topped the consensus estimate of $5.5 billion.

Ahead of its earnings, Bernstein analyst Harshita Rawat reinstated coverage on Visa stock with a Buy rating and a price target of $232 (5.3% upside potential). In a note to investors, the analyst said that she remains upbeat on Visa’s earnings and sees a recovery in cross-border volumes.

Overall, consensus among analysts is a Strong Buy based on 13 Buys and 2 Holds. The average analyst price target of $242.29 implies upside potential of about 10% to current levels. Shares have gained around 16% over the past year.

Furthermore, Visa scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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