Visa (V): Acquisition Drives a Higher Multiple - Piper Jaffray

Piper Jaffray analyst, Jason Deleeuw maintained his Overweight rating on shares of Visa (NYSE: V) after Visa slightly beat FY 3Q consensus EPS and posted in-line revenue. Visa closed on the Visa Europe (VE) acquisition (immaterial impact to earnings during the quarter) and also announced a new strategic partnership with PayPal that will likely be a meaningful net benefit to Visa and its partners in the payments ecosystem over time.

The analyst maintained his FY ’16 EPS estimate of $2.80, but reduced his FY ’17 estimate from $3.26 to $3.22 reflecting softer debit and cross-border volume growth. While estimates move lower, the PT increases from $92 to $94 on a higher valuation multiple (28x vs. 27x previous) given the coming multi-year accretion from VE.

No change to Overweight rating given our VE accretion, China expansion, and some easing of macro headwinds.

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 $78.79 yesterday.

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