Visa Earnings Slow But Top Views; Dow Jones Stock Edges Lower

Credit-card giant Visa reported slower earnings growth after the close that beat second-quarter estimates. The Visa earnings report comes after fellow Dow Jones stock American Express reported mixed results earlier this month. Visa stock fell slightly late after closing near record highs.

Visa Earnings

Estimates: Wall Street expected Visa earnings per share to charge ahead 12% to $1.24, according to Zacks Investment Research. Revenue was seen rising 7% to $5.43 billion.

Results: Visa earnings rose 18% to $1.31 a share, the third straight quarter of slower growth but much better than expected. Revenue climbed 8% to $5.45 billion, the smallest gain in 11 quarters.

Visa Stock

Visa stock lost a fraction in after-hours action. Shares closed down 0.1% to 161.50 after hitting a record 162.03 intraday on the stock market today. Visa stock is modestly extended after breaking out from a 150.29 handle buy point on March 4.

The payment stock’s relative strength line has been holding near record highs. The RS line, which tracks a stock’s performance vs. the S&P 500 index, held strong during the sharp stock market correction in late 2018.

American Express Earnings

Earlier this month American Express beat on earnings, though revenue fell short. Management also reiterated its previous guidance, and said it continues to see a favorable macro backdrop.

American Express stock closed up 5 cents to 104.02, just below a 114.35 buy point. Shares touched 114.36 intraday. The consolidation is either a short flat base or a cup-with-handle base going back to early December.

Visa archrival Mastercard rose 0.7% to 245.29, hitting a record high. Mastercard stock, an IBD Leaderboard member, reports April 30.

Analysts Rate Visa Stock

CFRA analyst Scott Kessler downgraded Visa to buy from strong buy ahead of earnings. He remains upbeat on the stock, though he now sees limited upside to his 149 price target.

“We continue to like the company’s secular growth story, being driven by the shift in payments from paper (cash and checks) to digital (online and mobile),” he said in a research note. “Additionally, V is a global payments leader in terms of market share and company size. We think significant investments in internal development and acquisitions (of companies and technologies) and partnerships, with a focus on access, ease of use, speed and security, will help sustain V’s record of operation and financial success.”

Kessler believes sustained healthy global growth, particularly in developing markets, is key. This is despite the fact he has concerns about international weakness and the strong dollar.

Meanwhile Wedbush Securities analyst Moshe Katri, who rates the Dow Jones stock as outperform, hiked his price target last month from 150 to 162. He cited tailwinds ahead for Visa stock.

“We point to a host of growth/scale catalysts, including the disintermediation of cash/checks by electronic payments, networks’ increased dominance in the payments ecosystem, incremental revenue opportunities from European regulations, incremental volume from hypergrowth mobile payments, ACH (Automated Clearing House network)-based revenue growth opportunities, ongoing revenue/cost synergies contributions from VE (Visa Europe) and ongoing traction in B2B,” he said in a research note.