Preview: Visa (V) Looks to Increased Spending, International Growth for a Q3 Beat (DFS, AXP, MA, More...)
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Shares of Visa (NYSE: V) are trading modestly higher, ahead of the company's third quarter earnings report, expected out after the market closes today, July 28, 2010. Shares are up 0.20% to $76.76 in early afternoon trading.
The company is expected to report EPS of $0.93 on revs of $1.97 billion. For the second quarter, the company reported EPS of $0.96 and revs of $2.0 billion, topping the consensus EPS of $0.91 and revs of $1.93 billion. Last year, for the third quarter, the company reported EPS of $0.67 and revs of $1.6 billion, mixed to the consensus EPS of $0.64 and revs of $1.64 billion.
Shares have fallen throughout the quarter to end 23% lower to $70.75 at the end of June. The stock is currently trading 12.7% since the start of 2010.
The stock is trading at a forward P/E of 19.6x FY10 EPS estimates, compared to 15.7x for Mastercard (NYSE: MA), 20.4x for Discover Financial Services (NYSE: DFS), and 14x for American Express (NYSE: AXP).
Data from Bloomberg shows that 32 analysts have a Buy rating, 4 have a Hold, and none suggest to Sell the shares. The analyst price target average is $105.50, with a high of $120, and a low of $86.
Analyst Ratings Through the Quarter
In April, FBR Capital started the company at Outperform, with a price target of $115.
Also in April, Oppenheimer maintained their Outperform rating while raising their price target from $100 to $110.
Susquehanna, at the end of April, increased their price target on the shares from $113 to $115, and maintained their Positive rating on the shares.
In May, Stifel Nicolaus downgraded from Buy to Hold.
SunTrust upgraded the stock from Neutral to Buy, with a price target of $96.
Starting June, Stifel Nicolaus upgraded the shares from Hold to Buy.
Summary
Early in the quarter, Visa announced that they would be acquiring Cybersource for $26/share, or about a $2 billion total consideration. The transaction will expand Visa's eCommerce presence. CEO Joseph Saunders commented that the acquisition will allow Visa to "meet the growing demand among merchants globally for robust, secure online payment processing capabilities."
Visa will exceed Janney's 13% payment growth expectations, according to the firm, based on AXPs 21% increase in average spending per card. Notably, they mention the need to replace the current magnetic strip system with a "chip and PIN" setup. The change would mean replacement to over 6 million point of sale machines in the U.S. Also, BofA (NYSE: BAC) mentioned an 80% reduction in their card interchange fees, which Janney downplays with the availability of the Government to to "adjust" interchange fees to "make allowance for the fraud prevention costs incurred by the issuer in relation to its electronic debit transactions. Janney has a Buy rating on the shares, with a fair value of $100.
J.P. Morgan sees the shares positioned for a "relief rally." JPM currently estimates a Q3 EPS of $0.94, with an Overweight rating and price target of $96.00. JPM also expects purchase volumes up 13%, are estimating 14% in processed transaction growth, and 13% increase in constant currency cross-border volume growth. JPM notes that Visa matched Mastercards acquirer fee, which may add up to $250 million in annualized gross revs, and $0.20 annualized beginning in FY11. JPM expects that Visa will defend its business model and growth targets without getting too specific until the Fed issues official financial reform guidance next year.
Duncan-Williams sees modest impact from debt interchange regulation, and sees Visa staying constant on overall fees. DW sees Visa reporting better than 14% transaction growth and estimates that they will report somewhere around 17%. Duncan Williams notes that transaction growth, coupled with upside to International Transaction Fees, should lead to some upside versus consensus expectations. Duncan has a Strong Buy rating on the shares, with a price target of $119. They expect a Q310 EPS of $0.92 with $1.957 billion in revs.
Visa, Inc. is expected to release their Q310 earnings on Wednesday, July 28, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
The company is expected to report EPS of $0.93 on revs of $1.97 billion. For the second quarter, the company reported EPS of $0.96 and revs of $2.0 billion, topping the consensus EPS of $0.91 and revs of $1.93 billion. Last year, for the third quarter, the company reported EPS of $0.67 and revs of $1.6 billion, mixed to the consensus EPS of $0.64 and revs of $1.64 billion.
Shares have fallen throughout the quarter to end 23% lower to $70.75 at the end of June. The stock is currently trading 12.7% since the start of 2010.
The stock is trading at a forward P/E of 19.6x FY10 EPS estimates, compared to 15.7x for Mastercard (NYSE: MA), 20.4x for Discover Financial Services (NYSE: DFS), and 14x for American Express (NYSE: AXP).
Data from Bloomberg shows that 32 analysts have a Buy rating, 4 have a Hold, and none suggest to Sell the shares. The analyst price target average is $105.50, with a high of $120, and a low of $86.
Analyst Ratings Through the Quarter
In April, FBR Capital started the company at Outperform, with a price target of $115.
Also in April, Oppenheimer maintained their Outperform rating while raising their price target from $100 to $110.
Susquehanna, at the end of April, increased their price target on the shares from $113 to $115, and maintained their Positive rating on the shares.
In May, Stifel Nicolaus downgraded from Buy to Hold.
SunTrust upgraded the stock from Neutral to Buy, with a price target of $96.
Starting June, Stifel Nicolaus upgraded the shares from Hold to Buy.
Summary
Early in the quarter, Visa announced that they would be acquiring Cybersource for $26/share, or about a $2 billion total consideration. The transaction will expand Visa's eCommerce presence. CEO Joseph Saunders commented that the acquisition will allow Visa to "meet the growing demand among merchants globally for robust, secure online payment processing capabilities."
Visa will exceed Janney's 13% payment growth expectations, according to the firm, based on AXPs 21% increase in average spending per card. Notably, they mention the need to replace the current magnetic strip system with a "chip and PIN" setup. The change would mean replacement to over 6 million point of sale machines in the U.S. Also, BofA (NYSE: BAC) mentioned an 80% reduction in their card interchange fees, which Janney downplays with the availability of the Government to to "adjust" interchange fees to "make allowance for the fraud prevention costs incurred by the issuer in relation to its electronic debit transactions. Janney has a Buy rating on the shares, with a fair value of $100.
J.P. Morgan sees the shares positioned for a "relief rally." JPM currently estimates a Q3 EPS of $0.94, with an Overweight rating and price target of $96.00. JPM also expects purchase volumes up 13%, are estimating 14% in processed transaction growth, and 13% increase in constant currency cross-border volume growth. JPM notes that Visa matched Mastercards acquirer fee, which may add up to $250 million in annualized gross revs, and $0.20 annualized beginning in FY11. JPM expects that Visa will defend its business model and growth targets without getting too specific until the Fed issues official financial reform guidance next year.
Duncan-Williams sees modest impact from debt interchange regulation, and sees Visa staying constant on overall fees. DW sees Visa reporting better than 14% transaction growth and estimates that they will report somewhere around 17%. Duncan Williams notes that transaction growth, coupled with upside to International Transaction Fees, should lead to some upside versus consensus expectations. Duncan has a Strong Buy rating on the shares, with a price target of $119. They expect a Q310 EPS of $0.92 with $1.957 billion in revs.
Visa, Inc. is expected to release their Q310 earnings on Wednesday, July 28, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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