Visa Approves $8B Share Buyback As Quarterly Profit Shines
Visa Inc. outperformed quarterly earnings and revenue expectations as the credit card company benefited from consumers shopping online during the holiday season.
Visa’s (V) total revenue in the fiscal first quarter slipped 6% to $5.7 billion year-on-year, topping analysts’ expectations of $5.52 billion. The global payment company stated that the drop was due to cross-border volume, which was partially offset by growth in payments volume and processed transactions.
Visa earned an adjusted $1.42 per share in the reported quarter versus $1.46 a share in the year-earlier period. Analysts had been looking for $1.28 per share. In addition, the company’s board approved an $8 billion share buyback program, taking total funds available for stock repurchase to over $11 billion.
“Our performance in the fiscal first quarter reflected solid results and continued positive momentum in a challenging COVID-19 environment. We saw sustained strength of debit and eCommerce volumes as well as resilient domestic spending in most countries,” Visa CEO Alfred F. Kelly, Jr commented. “We continued to deliver robust Visa Direct transaction growth and accelerated our value-added services revenue – all reflective of our progress in the enablement of money movement globally.”
Payments volume for the three months ended Dec. 31, increased 5% year-on-year, while total cross-border volume fell 21% in the quarter.
Following the earnings results, Mizuho analyst Dan Dolev reiterated a Buy rating on the stock with a $250 price target.
“With slow but persistent improvement in higher-yielding cross-border travel, continued momentum in e-commerce, and higher adoption of credit cards in brick-and-mortar, we believe both V [Visa] & MA [Mastercard] remain highly attractive as the global economy reopens in 2021,” Dolev wrote in a note to investors. “Our work points to accelerating card penetration and a boost to US volume growth. We believe the long-term stability and V's best-in-class terminal margins (along with MA) should merit a mid-teens revenue multiple.” (See V stock analysis on TipRanks)
The rest of the Street is firmly in line with Dolev’s bullish outlook with a Strong Buy consensus rating. That’s based on 19 Buys versus 3 Holds. With shares up about 9% over the past three months, the average analyst price target of $235.95 implies upside potential of another 19% over the coming year.
Meanwhile, TipRanks' Hedge Fund Activity tool shows that confidence in V is currently negative as 37 hedge funds decreased their cumulative holdings in the stock by 339.5K shares in the last quarter.
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