Visa Delivers Strong Q3 Performance, Analysts Remain Bullish

After Visa Inc V reported its third-quarter earnings, analysts weighed in on the stock.

Raymond James analyst John Davis reiterated Visa Inc V shares with an Outperform and raised the price target from $282 to $284.

Davis said the re-rating followed solid third-quarter results that featured a ~100 bp revenue beat and ~200 bp of EPS upside relative to the Street.

He noted that while investors may pick at decelerating cross-border volumes and international transaction revenue growth, this is essentially a function of moderating travel inflation and lower FX volatility rather than demand destruction.

Davis added quarter-to-date trends remained consistent with the third quarter across both U.S. and XB payment volumes, and the fourth quarter commentary for ~10% net revenue growth and a 200-300 bp step down in opex growth would likely leave fourth quarter Street estimates largely unchanged. 

He added the firm believed the fourth quarter outlook would prove conservative and with the stock trading at a discount to historical levels despite double-digit-plus revenue and mid-teens EPS growth, he continued to recommend investors add or initiate positions. 

Citigroup analyst Ashwin Shirvaikar maintained Visa with a Buy and raised the price target from $273 to $275.

Visa delivered a good top- and bottom-line beat in its fiscal third quarter of 2023, Shirvaikar said.

"Resilient consumer spending, on-track cross-border volume, solid value-added services, and 20% growth in Visa Direct transactions underpinned this performance," Shirvaikar added.

A Visa Direct client deconversion was mentioned on the call, but it had minimal revenue impact.

Quarter-to-date U.S. volumes are up ~6%, in line with FY-3Q23.

Visa commented on its fourth quarter slowing further from fiscal third quarter levels due to service fee timing, slower cross-border growth and lower FX volatility with Shirvaikar noting the company will manage operating expense growth to be sequentially down.

"Overall as expected, it's low-double-digit net revenue growth and mid-teens EPS growth in FY23," Shirvaikar said.

Citgroup's estimates moved up modestly, mainly for the beat/flowthrough.

RBC Capital Markets analyst Daniel Perlin maintained Visa with an Outperform and raised the price target from $265 to $290.

"Despite the continued rhetoric of a possible weakening consumer, Visa's print is not showing signs of cracking," said Perlin.

The analyst added the third quarter exceeded expectations and fourth quarter guidance was broadly consistent with prior expectations, which all else equal, pointed to continued stability, with parts of cross-border travel still recovering (specifically mainland China), consumer spending trends in July similar to the third quarter, and incremental new flows and value-added services helping offset possible cyclical headwinds.

Susquehanna analyst James Friedman maintained Visa with a Positive and raised the price target from $266 to $300.

Visa's third-quarter results demonstrated better-than-expected results, said Friedman, driven by strength in Value-Added Services (up 19%), solid international payment volumes (up 12%), and falling operating expenses.

"Though commercial volume growth slowed off tough comps (9% in Q3 vs. 15% in Q2), cooling inflation, particularly in oil prices can explain some of this," he added.

Other analysts' ratings include:

Wedbush analyst Moshe Katri reiterated Visa with an Outperform and a $270 price target.

Credit Suisse analyst Moshe Orenbuch maintained Visa an Outperform and raised the price target from $265 to $275.

V Price Action: Visa shares closed Wednesday down 0.67% at $237.10. Visa shares have a 52-week low of $174.60 and high of $245.37.

Read Next: Value Stocks Defy Rate Hikes: 3 Blue Chips Showing Resilience In The Face Of Federal Reserve's Tightening

Photo: Shutterstock