Visa Should Deliver A Solid Quarter As Headwinds Begin To Ease

Barclays expects Visa Inc V to deliver solid results for the fourth quarter, saying headwinds have started to ease. If the company's EPS exceed Street estimates, it would become the fourth straight quarter of earnings beat after a miss in in last year's September quarter.

The company will release its results on October 24.

Analyst Darin Peller liked the company's stock heading into the fourth quarter and expects growth to inflect next fiscal year. He pointed out that headwinds like CBV growth, forex, gas, and Russia have eased to support his argument. Therefore, he maintained an Overweight rating and boosted the target price from $90 to $100.

For the fourth quarter, the brokerage expects Visa to top the Street EPS estimate of $0.73 fueled by weakening GBP and lower-than-expected costs. The firm estimates EPS of $0.76 for the September quarter.

"Given our expectation for 20%+ Y/Y EPS growth in CY17 and "high-teens" growth in CY18 vs. CY16E's ~8% Y/Y growth, with shares up 5% YTD, we see meaningful upside to shares from current levels. Our $100 PT uses a 24x multiple on our CY18E EPS of $4.15, which is reflective of where we expect shares to trade 12 months from today," the analyst said in a note.

During the conference call, the brokerage expects an update on synergies from Visa Europe, cross-border volume growth trend, China timing and outlook for fiscal year 2017, which is expected to be in line with consensus.

At last check, Visa traded at $82.58, up 1.24 percent.