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Visa Blows Past Wall Street Estimates Thanks to a Surge in One Major Area

Valerie Young

Visa   posted higher quarterly profit than analysts estimated amid accelerating payment growth and the integration of a former European subsidiary it repurchased.

The San Francisco-based company's adjusted earnings of 86 cents a share for the three months through March, its fiscal second quarter, compared with the 79-cent average of analysts' estimates in a FactSet survey. Payment volume climbed 39% to $1.7 trillion.

"Similar to the first quarter, our business momentum was broad-based with solid payment volume growth, a double-digit increase in cross-border revenue and healthy metrics from all of the regions," CEO Alfred Kelly, who succeeded Charlie Scharf, said in on an earnings call. 

Revenue was $4.5 billion, up 23%, surpassing the $4.3 billion average of FactSet estimates, and aided by the Visa Europe acquisition, which the company completed in late June.

Net income, including a one-time charge of $1.5 billion and $192 million related to the company's purchase of Visa Europe, dropped 75% to $430 million. 

"In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business," Kelly said in a statement. 

The company's cross-border transaction volume, including payments handled by Visa Europe, more than doubled in the quarter. Total processed transactions jumped 42% to 26.3 billion or 12%, adjusted for Visa Europe.

"Operating trends across the business look strong, with volume growth modestly better than our expectations," Sanjay Sakhrani, an analyst with Keefe, Bruyette & Woods, said in a note to clients. "Top-line growth was solid in the quarter, primarily driven by higher international transaction fees."

KBW analysts maintained an outperform rating on the stock with a price target of $104. Visa's shares surged 2.1% to $93.09 after the close of regular trading in New York. The shares previously rose 19.2% this year, beating the broader S&P 500.

This article, originally published at 4:33 p.m. on Thursday, April 20, 2017, has been updated with company and analysts' comments.

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