Company Reports

Following particularly strong fiscal second-quarter results, Visa came back down to earth in its fiscal third quarter but continued to see strong growth.

Visa is a longtime, established market leader that still enjoys strong growth prospects. Despite the ongoing evolution of the payment industry, we think that a wide moat surrounds the business and that Visa’s position in the global electronic payment infrastructure is essentially unassailable.

Despite recent uncertainty, consumer spending is holding up well, leading to strong top-line growth for Visa in its fiscal second quarter.

Visa's fiscal first-quarter results largely echoed those of peer Mastercard and suggest consumer spending is holding steady.

Visa is a longtime, established market leader that still enjoys strong growth prospects. Despite the ongoing evolution of the payment industry, we think that a wide moat surrounds the business and that Visa’s position in the global electronic payment infrastructure is essentially unassailable.

The Wall Street Journal reported on Nov. 10 that Visa and Mastercard have reached a new settlement with merchants in an attempt to bring this long-running litigation to a close.

Visa has benefited from strong and stable consumer spending this year, and that continued to be the case in its fiscal fourth quarter.

Visa delivered a strong fiscal third quarter which suggests that consumer spending is holding up well.

According to The Wall Street Journal, large merchants such as Walmart and Amazon are exploring options to issue stablecoins in an attempt to bypass traditional payment systems and avoid fees.

Visa is a longtime, established market leader that still enjoys strong growth prospects. Despite the ongoing evolution of the payment industry, we think that a wide moat surrounds the business and that Visa’s position in the global electronic payment infrastructure is essentially unassailable.

Overall, we think Visa's fiscal second quarter largely showed the company maintaining a steady path and management has not yet seen signs that consumer spending is weakening. However, we see uncertainty ahead.

Visa had settled into a fairly steady path over recent quarters, as one-time impacts started to roll off and growth normalized. Taken on their own, Visa’s fiscal first-quarter results showed the company’s results holding up. We think Visa continues to enjoy favorable long-term secular growth prospects, and a stable environment highlights the strength of the wide-moat company. We will maintain our $289 fair value estimate and see shares as modestly overvalued.

Visa is a longtime, established market leader that still enjoys strong growth prospects. Despite the ongoing evolution of the payment industry, we think that a wide moat surrounds the business and that Visa’s position in the global electronic payment infrastructure is essentially unassailable.

We think Visa has settled into a comfortable groove this year as pandemic, political, and macro effects have dissipated. The fiscal fourth quarter was further evidence of stability in the business, in our view. In this type of environment, we think the wide-moat company can show off its ability to consistently generate good growth and strong profitability. We will maintain our $272 fair value estimate and see shares as about fairly valued.

On Sept. 24, Bloomberg reported that the Department of Justice is set to announce an antitrust suit against Visa. The Department of Justice started an investigation in 2021, and the suit could be filed as early as today. The suit would appear to be centered on claims of anticompetitive behavior for debit card payments. In our view, given the wide-moat company’s market position, legal and regulatory risk is ever-present for Visa, and, while serious, this suit would not be the only material legal issue the company has outstanding. At this point, it is difficult to predict the exact consequence of this development, but we note that we have factored ongoing legal and regulatory costs into our valuation. We maintain our $272 fair value estimate and see shares as about fairly valued.

As Visa has moved past postpandemic tailwinds, we think growth has returned to normal levels, and we see the macro environment as the biggest swing factor in the near term. While some growth metrics slowed modestly in the fiscal third quarter, we don’t think this quarter marks a significant change on this front, and we continue to see the company’s path forward as relatively stable. We will maintain our $272 fair value estimate for the wide-moat company and see shares as about fairly valued at the moment.

In March, Visa and Mastercard announced that they had reached a settlement to a long-standing antitrust lawsuit. As part of the agreement, the networks would slightly lower credit interchange fees and cap these fees at the current level for five years. At the time, we were happy to see this lawsuit seemingly resolved. But according to The Wall Street Journal, the judge has now informed Visa and Mastercard that she deems these changes inadequate and is unlikely to approve the settlement. This would presumably force the networks to arrange a new settlement or go to trial. While this is an obvious setback and we would prefer to see this matter closed as quickly as possible, we believe Visa and Mastercard’s unique competitive positions and their wide moats create ongoing legal and regulatory event risk, and this lawsuit represents just one piece of that. We will maintain our $272 and $451 fair value estimates for Visa and Mastercard, respectively, and see shares for both companies as about fairly valued.

Visa is a longtime, established market leader that still enjoys strong growth prospects. Despite the ongoing evolution of the payment industry, we think that a wide moat surrounds the business and that Visa’s position in the global electronic payment infrastructure is essentially unassailable.

Visa’s fiscal second quarter essentially showed the company holding steady. Following the company's ups and downs during the pandemic and the subsequent recovery, we think Visa has now settled into a more normalized groove. We believe the company’s recent performance highlights the long-term secular tailwinds that will continue to drive solid growth over the long run. In our view, the combination of Visa’s wide moat and its long growth runway creates a very attractive backdrop. We will maintain our $260 fair value estimate and see shares as fairly valued.

Visa and Mastercard announced a resolution to a long-standing antitrust lawsuit. As part of the agreement, the networks will slightly lower credit interchange fees and cap these fees at the current level for five years. It has been estimated that this agreement will result in $30 billion in interchange savings for merchants. We would note that the networks do not receive interchange fees, those are passed along to issuers, but there could be some indirect impacts. Still, we see this as a reasonable price to resolve the uncertainty of the lawsuit. We believe Visa and Mastercard’s unique competitive positions and their wide moats create legal and regulatory event risk, and while this announcement resolves this particular issue, this risk is ongoing. We will maintain our $260 and $451 fair value estimates for Visa and Mastercard, respectively, and see both stocks as about fairly valued at the moment.