Visa (V) Estimates are More Back End Loaded - Piper Jaffray

Piper Jaffray analyst, Jason Deleeuw, noted that Visa (NYSE: V) needs to see an acceleration in second half results in order to meet estimates. The US remained stable despite slowing in oil producing regions but cross border transactions slowed. This can be partly offset by OpEx reductions near term. No change to Overweight rating.

Visa missed consensus revenue by ~1%, but OPEX control drove EPS of $0.69 vs. consensus at $0.68. Constant currency net revenue growth totaled 8% (5% reported) driven by constant currency volume growth of 11% vs. 12% the prior quarter. U.S. payment volume growth trends remain solid, but volume growth softened in some oil producing nations.

Cross-border volume growth slowed to 4% on a constant currency basis vs. 5% the prior quarter. Visa maintained its FY ’16 guidance, but said its guidance could be negatively impacted by continued soft cross-border volume growth (guidance assumes 2H acceleration) and continued subdued domestic volume growth in certain countries.

U.S. payments volume growth accelerated to 11% through January vs. 10% in the prior quarter. U.S. consumer spending trends remain mostly steady, though the lapping of the worst of the gas price plunge helped drive slight acceleration. Cross-border volume growth improved slightly through January 21 to 5% growth vs. 4% the prior quarter

The analyst cut FY ‘16/’17 EPS estimates from $2.83/$3.40 to $2.80/$3.38 reflecting softer volume/revenue growth.

The $87 PT drops from $88 and is based on 25x CY17 EPS of $3.48 (down from $3.51).

For an analyst ratings summary and ratings history on Visa click here. For more ratings news on Visa click here.

Shares of Visa closed at $69.33 yesterday.

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