Shares of Visa Inc. have consistently performed well compared to the S&P 500 over the past decade. However, one analyst is questioning whether Visa’s stock is still a safe investment, particularly in light of the upcoming earnings report.
Visa recently ended its fiscal year and will be releasing its new annual outlook after trading hours on October 24. Mizuho analyst Dan Dolev expressed concern about the consensus revenue expectations, which he believes may be too optimistic.
According to current projections, fiscal year 2024 is expected to see a net revenue growth of 10.5%. Dolev questions whether this forecast takes into account the potential impact of various factors such as an overly optimistic macroeconomic environment, sustained high inflation, or an improvement in Visa’s ability to capture additional consumer spending.
It remains to be seen how Visa will perform in the near future, but shareholders and investors should closely monitor the upcoming earnings report for potential insights into the company’s outlook.
Visa’s Revenue Prospects for Fiscal 2024
According to analysts, Visa would need an increase in overall Personal Consumption Expenditure (PCE) of $1.1 billion to $1.2 billion in fiscal 2024 in order to reach its current consensus revenue target. This represents an increase from the estimated $1.1 billion in fiscal 2023. It should be noted that the PCE figures for 2022 and 2023 were inflated by inflation, which is expected to ease in the future.
In light of these projections, Jefferies analyst Trevor Williams has given Visa’s stock a neutral rating. He has also reduced the price target for Visa shares from $255 to $240.
HSBC’s Preferred Stock Play in Fintech Turnaround: PayPal vs. Block
In a recent analysis, HSBC preferred a cautious approach towards both Visa and Mastercard Inc. Writing in a report, Jefferies analyst Trevor Williams stated that neither company’s current setup appears particularly compelling ahead of earnings. He expects minimal top-line upside and projects that Mastercard will guide 4Q revenue below Street expectations. In addition, Williams anticipates Visa’s initial FY24 revenue outlook will likely reflect sub-10% growth.
Despite these reservations, Williams still considers both Visa and Mastercard as relative safe havens due to their ability to protect earnings per share. Furthermore, he believes that these companies possess a scarcity value within the broader industry while still being valued at reasonable multiples.
Given this assessment, Williams has assigned buy ratings to both Visa and Mastercard shares. He has set a price target of $280 for Visa shares and $475 for Mastercard shares. It is important to note that Mastercard will announce its earnings before the start of trading on October 26.