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On Tuesday, Evercore ISI initiated coverage on Visa Inc . (NYSE:V) with an In Line rating, accompanied by a price target of $330.00. The research firm highlighted Visa's enduring position as a leading company in the payment industry, emphasizing its consistent strategy and potential for growth in various sectors. With a substantial market capitalization of $437 billion and impressive revenue growth of 12.2% over the last twelve months, Visa's market dominance is evident. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with analysts maintaining a Strong Buy consensus.
Evercore ISI noted Visa's long-standing approach, which includes adapting to significant secular trends towards card and digital payments, expanding its network, introducing new products, and strategically leveraging pricing to sustain growth. The analyst pointed out that while Visa's pricing strategy often goes unnoticed or is misunderstood in relation to interchange fees, it remains a crucial element for the company's revenue and profit margins. This strategy has helped Visa maintain an exceptional gross profit margin of 100% and a strong return on assets of 28.4%. For deeper insights into Visa's financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and over 10 additional ProTips.
The research firm also recognized Visa's efforts to extend its growth beyond the core network. Visa aims to enhance value-added services (VAS) and commercial/business-to-business (B2B) payments, which are expected to contribute to top-line growth while maintaining margins comparable to its core business. Evercore ISI anticipates that Visa will continue to narrow the gap with Mastercard (NYSE:MA) in terms of VAS penetration and is well-situated to capitalize on commercial/B2B opportunities. Additionally, Visa's significant market share in U.S. debit could provide a cushion against reduced spending in economic downturns.
According to Evercore ISI, Visa's stock has been the most resilient within their coverage group and is likely to remain a relative outperformer and a defensive choice if market sentiment stays cautious. The firm expects that Visa will share in market gains when conditions improve, although it may not rise as much as other stocks that have experienced greater declines. Trading at a P/E ratio of 34.4, investors should note that Visa will report its next earnings on April 24, 2025. Get exclusive access to Visa's detailed Pro Research Report and real-time financial metrics through InvestingPro.
In other recent news, MoneyGram has announced a strategic partnership with Mastercard to enhance its digital money movement services. This collaboration aims to provide faster and more secure payment services both domestically and internationally, allowing customers using U.S.-issued Mastercard cards to send funds to 38 eligible markets with plans for further expansion. Meanwhile, Visa has made a $100 million bid to replace Mastercard as the network for the Apple (NASDAQ:AAPL) credit card, as reported by The Wall Street Journal. This move comes amid a competitive contest involving major networks like American Express (NYSE:AXP), which is also vying for a role in the Apple card's operations.
Additionally, UBS has highlighted the strengths of Visa and Mastercard in cross-border transactions, noting their extensive global networks and the resilience of this business segment against challenges such as nationalism and domestic regulations. Mastercard has also made leadership changes, appointing Tim Murphy as Vice Chair and welcoming Richard R. Verma as Chief Administrative Officer. These appointments are part of Mastercard's efforts to bolster its executive team and strategic initiatives.
In another development, both Visa and Mastercard are reportedly considering a return to the Russian market after suspending operations in 2022 due to geopolitical tensions. The potential re-entry into Russia is driven by the significant market opportunities that remain, although it would face challenges from the established local payment systems. These recent developments underscore the ongoing strategic maneuvers by Visa and Mastercard to maintain their competitive edge in the global financial services industry.
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