Visa’s Earnings Beat by Travel Demand Analysts Bulged-up By

Visa’s (V. Earnings Beat) Driven by Travel Demand. Analysts Bulled-up

By Senad Karaahmetovic

Shares of Visa (NYSE:) are up about 2% in pre-open Wednesday trading after the payment-processing business reported stronger-than-expected FQ4 results.

Visa an FQ4EPS of $1.93 on revenue $7.8 billion, which compares to the FactSet consensus of $1.87 on revenue $7.57 billion. The Bloomberg consensus of $3.01 Trillion was not met by an increase in payment volume, which rose 5.2% YoY to $2.93 Trillion.

Strong travel demand drove earnings. Cross-border volumes grew 36% at constant exchange (CC), which was better than the +35.8% analyst estimation.

Visa announced that its board approved a new $12 billion share-buyback plan. The company also raised its quarterly dividend to $0.45, up from $0.375.

“As we look ahead, while some short-term uncertainty exists, we remain confident in Visa’s long-term growth trajectory across consumer payments, new flows and value added services,” said CEO Alfred Kelly.

Visa expects F23-CC revenue growth in the mid-teens excluding FX headwinds of 4% and Russia’s 2%, according to guidance.

BofA analysts kept a Buy rating, as guidance came in higher than expected.

“We view Visa’s ability to protect the bottom-line in nearly any macro scenario as particularly attractive in the current tape, along with the company’s resilient/diversified business model and competitive moat, as well as an enviable bal sheet/cash flow profile. V is now trading at a 39% P/E multiple premia to SPX vs. 5-yr average of 54%,” the analysts said in a client note.

Citi analysts lowered the PT to $238 from $254 per share but reaffirmed the Buy rating on V stock after a “solid” quarter and a “positive” outlook.

“While some investors might hesitate at the lack of an explicit downturn adjustment, Visa’s remarks highlight its ability to quickly adapt on the expense side to an inherently volatile environment. Meanwhile, we would note the ongoing diversification of the revenue base away from traditional consumer payments as new flows and value-added services now approach a third of revenues,” they wrote in a note.

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