Piper Jaffray Comments On Visa Following Strong Results

Visa V reported strong fiscal 1Q11 results with 14% y/y revenue growth and 20% y/y EPS growth. Revenue and operating income were in-line, while investment income helped drive a $0.03 beat vs. Piper Jaffray's model, $0.02 vs. consensus. It strongly reiterates its Overweight rating on Visa, as it believe Visa's strong international growth story, which is accelerating, has gotten lost in the shuffle of debit interchange regulation. Visa's U.S. credit volume growth accelerated in the December quarter to 7.6% vs. 6.4% in the September quarter. Visa's U.S. credit volume has now posted accelerating growth for four straight quarters, following five straight quarters of declines during the economic downturn. International credit volume growth also accelerated in the December quarter to 14.7% from 11.1% in the September quarter, driven by strong domestic and cross-border volume trends. International, cross-border, prepaid, e-commerce, and payments innovation all offer attractive long-term growth prospects for the Visa franchise. On the regulation front, it believes there is a growing likelihood that the Fed's initial proposal will be watered down and implementation delayed, although to what extent is still very difficult to judge. Piper continues to believe that consumers, not the networks, will bear the brunt of the negative fallout from the regulation. Piper has a $100 PT and Overweight rating on V V is trading higher at $72.37