Company Reports

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.

Visa’s fiscal first-quarter results showed growth slowing a bit but remaining solid. We think that as postpandemic tailwinds abate, the company’s growth will move more in line with our long-term expectations, and this quarter supports that view. While growth may moderate near-term, we still see the long-term outlook for Visa as quite bright, given the company's wide moat and ongoing secular tailwinds. We will maintain our $260 fair value estimate and see the shares as fairly valued.

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

We think Visa’s fiscal fourth quarter largely showed a continuation of recent trends. Growth remains healthy as consumer spending appears to be resilient, and the company is still seeing a modest benefit from a bounceback in cross-border spending. Overall, we don’t see any major surprises, and company guidance suggests management believes recent trends will continue into fiscal 2024. We will maintain our $241 fair value estimate for the wide-moat company. We see the shares as fairly valued at the moment.

Visa delivered solid growth and some margin improvement in its fiscal third quarter, and largely maintained its recent trajectory. We don’t see anything in the quarter that materially alters our long-term view and will maintain our $241 fair value estimate. We see shares as fairly valued at the moment.

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

Visa actually saw volume growth pick up a bit despite ongoing macroeconomic uncertainty, but outside of this, the wide-moat company largely maintained its recent path in its fiscal second quarter. While we’re encouraged by the company’s recent performance, we will maintain our $229 fair value estimate, and believe shares are currently fairly valued.

Visa’s fiscal first-quarter results largely mirrored what we saw from its peer Mastercard. Both companies are still enjoying a bit of a boost from the recovery in travel spending, but the impact is fading. Although there have been concerns about a potential macroeconomic downturn and the impact on consumer spending, we think volume has been holding up reasonably well. We will maintain our $229 per share fair value estimate for the wide-moat firm, and we view the shares as being fairly valued at this point.

Visa announced that current CEO Alfred Kelly will step down and Ryan McInerney will take over at the start of February. Kelly, who has been CEO since 2016, will assume the role of executive chairman at that time. We have a generally favorable view of Kelly's tenure, although we believe the company's wide moat is the dominant factor behind its strong performance. McInerney, who came to Visa from JP Morgan, has served as president at Visa since 2013. We think Visa's decision to go with an insider—and Kelly's continued presence as executive chairman—suggests that the company will largely maintain its recent strategic course, and we see that as the right move. We will maintain our $229 fair value estimate.

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

Visa continued to enjoy strong growth in its fiscal fourth quarter. Overall, while the company’s near-term future is somewhat tied to the direction of the economy, we think favorable long-term secular trends and an ongoing bounce back in travel-related spending put the wide-moat company in a relatively strong position. We will maintain our $229 fair value estimate and see the shares as modestly undervalued.

Visa maintained its momentum in its fiscal third quarter, and the company continues to enjoy unusually high growth. Absent an economic downturn, we expect the wide-moat company will enjoy significant tailwinds until cross-border and travel spending has fully normalized. We will maintain our $229 per share fair value estimate.

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

Visa delivered a strong second quarter, as the company continues to see some bounceback from its pandemic-related issues. We think the relatively quick recovery supports our wide moat rating and highlights the favorable long-term secular trend for Visa. While the decision to exit Russia will likely be a bit of an issue in the coming quarters, we think the company should be able to continue to achieve outsize growth in the near term as headwinds fall off. We will maintain our $221 fair value estimate.

Visa and Mastercard announced that they have suspended operations in Russia. As a result, cards issued by Russian banks will no longer work outside Russia, and cards issued outside Russia will not work within Russia. For both networks, transactions related to Russia accounted for 4% of net revenue, so this decision will represent a modest headwind this year. However, we believe both networks were positioned for outsize growth in 2022, as a rebound in travel and cross-border volume should positively affect revenue, and interim results announced by Visa suggest cross-border volume is picking up as the omicron variant has faded. Taking these factors in balance, we believe both networks will still enjoy solid growth this year. After reviewing our projections, we will maintain our fair value estimates of $221 for Visa and $369 for Mastercard, as well as our wide moat ratings for both.

Visa’s fiscal first-quarter results largely maintained the trends we’ve seen in recent quarters, and were roughly in line with what we saw from peer Mastercard this quarter. We think the relatively quick recovery supports our wide moat rating and a positive view on the long-term secular trend for Visa. While some near-term uncertainty remains given the rise of new variants and the fact that cross-border volumes have yet to completely recover, we think the company should be able to continue to achieve outsize growth in the near term as headwinds abate. We will maintain our $221 fair value estimate.

Amazon announced that it will continue to accept Visa credit cards in the U.K., reversing on its previous threat to stop accepting Visa just prior to the deadline. This change of heart comes as the two companies are working to resolve the dispute over fees. Merchants and the networks have argued for many years over interchange fees, and it is typically large merchants that lead the charge. Threatening to refuse to accept specific cards is a relatively extreme step but not unprecedented. We had expected Amazon and Visa to ultimately work out a solution, but whether this would be done prior to the deadline was unclear. As such, we are pleased by this development. However, we don’t believe the loss of volume would have been material relative to Visa’s overall business and believe this situation would have been significant only if it prompted other retailers to follow suit. We will maintain our $221 fair value estimate and wide moat rating for Visa.

Given recent political developments around the Build Back Better bill, we are reversing our forecast that the U.S. corporate tax rate will rise to 26% in 2022. We now believe the U.S. statutory tax rate will remain at 21% at least through President Joe Biden’s remaining term, which ends in early 2025. Our equity analysts will incorporate this new U.S. corporate tax rate assumption into their valuation models in the coming weeks. We previously simulated the impact of various tax rate changes on covered U.S. equities; reversing the statutory tax rate assumption to 21% results in a 3% average valuation increase, all else being equal.