Visa’s Stable Outlook with Caution: Hold Rating Amid Growth Challenges and Regulatory Risks

Monness analyst Gustavo Gala has maintained their neutral stance on V stock, giving a Hold rating on April 18.

Gustavo Gala has given his Hold rating due to a combination of factors that suggest Visa’s prospects are stable but not without concerns. He points to potential challenges to Visa’s revenue and earnings per share (EPS) growth targets for fiscal years 2024 and 2025, which may be at risk due to a combination of a less robust consumer spending environment, a normalization of travel-related revenue that could affect cross-border volumes, and pending legal and regulatory matters. Specifically, the potential impacts of the merchant settlement agreement and the partnerships between Capital One, Discover, and Visa are yet to be seen and could pose risks to Visa’s guidance.

Additionally, Gala acknowledges improvements in certain areas such as Visa’s value-added services (VAS) and new payment flows, which have shown solid performance and could provide optimism for Visa’s integration into the US Open Banking scene. However, he remains cautious about the longer-term growth prospects, suggesting that the tailwind from contactless payment adoption might wane as market saturation is reached. Gala also mentions the possibility of converting issuers outside of the US from domestic networks to Visa’s network as a potentially significant opportunity. Despite these factors, the Hold rating reflects an expectation of tempered growth and the need for Visa to navigate several variables that could affect its financial performance in the near term.

In another report released on April 18, Mizuho Securities also maintained a Hold rating on the stock with a $265.00 price target.

Based on the recent corporate insider activity of 50 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of V in relation to earlier this year.

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Visa (V) Company Description:

Visa, Inc. engages in the provision of digital payment services. It also facilitates global commerce through the transfer of value and information among global network of consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It offers debit card, credit card, prepaid products, commercial payment solutions, and global ATM. The company was founded by Dee Hock in 1958 and is headquartered in San Francisco, CA.