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Visa Falls On Guidance; Mastercard On Tap

Visa Falls On Guidance; Mastercard On Tap


Visa (V) topped fiscal fourth-quarter earnings Tuesday night, but forecast slower-than-expected 2022 revenue growth. Rival payments giant Mastercard (MA) releasing third-quarter earnings early Thursday. Visa stock and Mastercard stock fell Wednesday.


Jefferies analysts said in an Oct. 22 note to clients they expect muted results due to the Covid-19 delta spike in August and a deceleration in e-commerce.

“For Visa, we expect most top-line upside in Data Processing on higher processed transactions, driven by a steady recovery in cross-border (activity),” wrote analyst Trevor Williams.

Visa Earnings

Estimates: FactSet analysts expected Visa earnings of $1.55 a share for fiscal Q4, 38% above the year-earlier quarter. Full-year EPS was seen rising 15% to $5.81.

Revenue for the quarter was seen growing 28% year over year to $6.52 billion, to cap the year with $24.06 billion, a 10% annual gain.

Results: Visa reported earnings of $1.62 per share, a 45% jump from the year-ago quarter, on sales of $6.6 billion, a 29% increase. EPS was $5.91 for the year, while revenue rose 10% to $24.1 billion.

“Our performance was driven by the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services,” said Visa CEO Alfred Kelly. “Looking ahead, Visa is even better positioned for the future as cross-border travel recovers and we continue to drive the rapid growth of digital payments and enable innovation in money movement globally.”

Payments volume grew 17% for the quarter and 16% for all of 2021. Cross-border volume surged 38% in Q4 and 9% for the year. Processed transactions increased 21% for the quarter and 17% for the full year.

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Outlook: Visa sees 2022 revenue growth at the “high end of the mid-teens.” Analysts had targeted 20% growth.

In July, the Dow Jones giant ventured into the buy-now-pay-later domain, following in the footsteps of PayPal (PYPL) and several others. The program is called Visa Installments Solution. But unlike PayPal and other BNPL providers, which screen consumers for credit worthiness, Visa will not perform risk assessment on whether to extend installment loans for credit card issuers.

Visa also dipped its toe in NFTs. In August, it bought a CyberPunk, a non-fungible token of a digital artwork, for about $150,000 in Ethereum.

Visa Stock

Visa stock tumbled 6.9% to 215.77 in Wednesday’s stock market trading. Shares are in a flat base with a buy point of 252.77, according to MarketSmith, but undercut the low of the base and hit a six-month low.

Visa’s relative strength line is trending lower. Its RS Rating is 47 out of a possible 99, while its EPS Rating is 78. Both are below the 80 IBD recommends.

Rival Mastercard stock retreated just over 6% Wednesday. Its relative strength line also is slumping, near all-time lows. Mastercard’s RS Rating is just 31, while its EPS Rating is 79.

Among other payments stocks Square (SQ) sank 1.6% Wednesday morning. Square is getting into the BNPL market via a pending $29 billion acquisition of AfterPay.

PayPal stock dipped 0.7%. PayPal rose modestly Monday after saying it wouldn’t buy Pinterest (PINS). PYPL stock tumbled 10% last week on PINS takeover buzz.

Mastercard Earnings

Estimates: Analysts expect Mastercard earnings per share of $2.19, 37% higher than a year ago. Sales are seen coming in at $4.95 billion, a 29% year-over year increase.

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Results: Check back Thursday.

Last month, Mastercard announced it too was launching a BNPL program in the U.S. Dubbed Mastercard Installments, it’s slated to be rolled out to other markets in the future.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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