Visa stock target raised at Baird on potential earnings beat

  • Investing.com
Visa stock target raised at Baird on potential earnings beat

On Wednesday, Baird increased its price target for Visa (NYSE: V ) shares to $320 from $314, maintaining an Outperform rating. The firm highlighted Visa's potential for a mild beat in fiscal second-quarter revenue and earnings per share (EPS), citing the company's prospects as a long-term compounder.

Visa's stock currently trades at a roughly 27% premium to the S&P 500's next twelve months (NTM) price-to-earnings (P/E), which is significantly lower than the approximately 53% average premium it commanded from 2015 to 2019.

Baird's optimism is partly due to concerns that Visa's total addressable market (TAM) may be nearing saturation and technical worries about Class B shares entering the market. Despite these concerns, the firm remains positive about Visa's secular growth in retail, card services, and value-added services (VAS), as well as the company's strong free cash flow (FCF) and solid balance sheet.

The analyst expects that Visa's fiscal second-quarter revenue and EPS will likely surpass projections slightly. Furthermore, the outlook for fiscal year 2024 could see a cautious uplift, with revenue growth benefiting from easier comparisons in the second half of 2024.

This revised price target comes at a time when Visa's valuation relative to the broader market is at a decade low. The assessment by Baird suggests confidence in the payment processor's ability to continue growing despite market concerns.

InvestingPro Insights

As Visa continues to navigate the financial services landscape, current InvestingPro data provides a snapshot of its valuation and performance. With a robust market capitalization of $439.37 billion and a P/E ratio standing at 31.32, Visa showcases its significant presence in the industry. Its adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly lower at 30.04, indicating a marginal change in earnings valuation over the period.

InvestingPro Tips highlight Visa's solid financial practices and investor appeal. The company has not only maintained but also increased its dividend payments for 17 consecutive years, showcasing a commitment to returning value to shareholders. Moreover, analysts predict Visa will be profitable this year, which is corroborated by a high return on assets of 20.34% for the last twelve months as of Q1 2024. These factors contribute to Visa's reputation as a prominent player in the Financial Services industry.

For readers looking to delve deeper into Visa's financial metrics and gain further insights, InvestingPro offers additional tips and analysis. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of InvestingPro Tips available for Visa at https://www.investing.com/pro/V.

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