Visa May See Benefits From Battering Of The British Pound

While traders and investors are bombarded with news of sectors, industries and individual companies that will see near-term prospects diminished by the exit of the United Kingdom from the European Union, an analyst note from Baird highlighted the ways Visa Inc V can potentially benefit.

Favorable Foreign Exchange Rate

Looking to Visa’s European business, analysts at Baird had the insight that Visa pays nearly 70 percent of its annual costs in the pound, which has fallen about 10 percent or so since the Brexit vote. The sterling silver lining is that only 2 percent of Visa Europe’s revenues are in the declining denomination.

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Baird sees the positive effects of this fact on earnings per share as being approximately $0.02 per share, adding nearly 1 percent to Visa Europe’s earnings contribution. Baird’s year-out risk/reward view for Visa is favorable.

Visa shares were down $1.71 (2.3 percent) in Monday’s session, closing at $73.34.