Piper Sandler starts Visa stock with overweight on growth potential

  • Investing.com
Piper Sandler starts Visa stock with overweight on growth potential

On Monday, Piper Sandler initiated coverage on shares of Visa (NYSE:NYSE: V ), assigning an Overweight rating to the stock, along with a price target of $322. The firm highlighted Visa's potential for revenue growth, forecasting a 10.7% increase. This anticipated rise is expected to be fueled by several growth drivers, including a 10.4% growth in Data Processing, a 9.5% increase in Services, and a 10.7% rise in International revenues.

The firm's positive outlook on Visa is underpinned by the company's substantial annual aggregate transaction volume, which is approximately $15 trillion. Visa's total addressable market (TAM) is vast, exceeding $250 trillion, which offers significant room for growth.

Additionally, Visa's New Flows segment is expected to capture new sources of money movement for consumers, businesses, and governments, which Piper Sandler sees as a key vector for the company's future expansion.

Value Added Services are also seen as a critical aspect of Visa's strategy to strengthen client relationships by providing innovative solutions. These services are expected to help Visa not only maintain but also expand its operating margins. Piper Sandler projects an operating margin increase of 140 basis points in FY25, attributing this to Visa's scale, consistent execution, and the efficiencies and margin uplift from new and emerging technologies.

The firm's analysis suggests that Visa is well-positioned to leverage its foundational offerings to drive growth and sustain profitability. The company's diverse sources of revenue, significant transaction volumes, and ongoing technological advancements are seen as key factors that will contribute to Visa's financial performance in the coming years.

InvestingPro Insights

Visa's robust financial performance and promising growth prospects have made it a focal point for investors. With a market capitalization of $561.76 billion, Visa is a titan in the Financial Services industry. The company's commitment to dividend growth is evident, having raised its dividend for 17 consecutive years, reflecting its financial health and management's confidence in the business's future. This is particularly noteworthy for income-focused investors seeking stable dividend-paying stocks.

However, it's important for investors to be aware of the valuation metrics as well. Visa is currently trading at a high earnings multiple, with a P/E ratio of 31.16 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 29.73, indicating a premium valuation. The company's Price / Book multiple stands at 14.44, further exemplifying its high valuation in the market. These metrics suggest that investors are willing to pay a significant premium for Visa's quality, stability, and growth prospects.

For those considering an investment in Visa, PRONEWS24 can be used to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There, subscribers can find over 12 additional InvestingPro Tips to help inform their investment decisions, such as Visa's performance relative to near-term earnings growth and its stock's price volatility.

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