J.P. Morgan Calls Visa "PayPal On Steroids" (V)

J.P. Morgan Chase & Co. has an Overweight rating and a $89 price target on shares of Visa V after the company discussed its mobile strategy yesterday. In a note to investors, J.P. Morgan writes, "Our second look at Visa's mobile strategy announcement yesterday reveals an ambitious push by Visa to own the digital payment space, marrying concepts from what PayPal created over a decade ago with Visa's five decades of global payments expertise. We liked what we heard, including global interoperability and open architecture, and the wallet offering is probably the best we've seen since PayPal. But, it is still early and distribution, execution and adoption will be key, which is likely why Visa acknowledged it will be several quarters before any meaningful revenue is recognized. Perhaps the most interesting thing to watch is whether this strategy marks an important shift in business model for Visa, whereby it embraces being the merchant of record, opening up new revenue sources and closer proximity to consumers and merchants, but in-channel conflict with merchant acquiring partners. Net-net, we believe the message is right, the solution is overdue, and adoption will be tricky, but we are glad to see innovation in the storm of regulation (that could impair innovation if passed), and it is best for Visa to pursue this challenge now rather than be challenged by an outsider." Shares of V lost $1.01 yesterday to close at $79.34, a loss of 1.26%.