Shares of Visa have been rising since the company beat quarterly estimates last week. As a result, the IBD Stock of the Day is rising past an early buy point.
Visa stock made a solid move back above its 50-day moving average April 30, the day after it reported sales and earnings that topped analyst expectations. The company also set a $30 billion stock buyback program. That's on top of $4.7 billion still unspent from a previous repurchase plan.
The payment-processing giant reported March-quarter adjusted earnings of $2.76 per share on a 9% increase in revenue to $9.59 billion. Payments volume rose 8% for the quarter, which also beat views. Processed transactions rose 9%.
CEO Ryan McInerney said consumer spending "remained resilient, even with macroeconomic uncertainty." While some categories such as travel have softened, the overall spending trends remain strong. The company, he added, is in a good position for "the rest of the fiscal year and beyond."
In a conference call with analysts, McInerney said Visa continues to expand its network, with more than 1 million merchant locations added each in India, Mexico and Brazil last year. Use of technologies such as Tap to Phone and Tap to Pay is expanding, too.
Visa Stock's Competitive Edge
After the earnings report, USB analyst Timothy Chiodo wrote in a note to clients that both Visa and Mastercard offer attractive traits. Those include profitability, deep competitive moats, exposure to discretionary and nondiscretionary spending and "an ability to grow through moderate recessionary conditions ... ."
Chiodo trimmed the price target on Visa stock to 395 from 400 on valuation factors and kept a buy recommendation.
Of 44 analysts covering Visa stock, 75% have buy ratings. The average analyst price target is 380.31, according to FactSet. That's a potential 7% rise from its current price of around 354.
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The consensus earnings estimate for the fiscal year ending in September is $11.33 a share, for an increase of 12.7%. That's a modest decline from fiscal 2023 and 2024 EPS growth of 16.9% and 14.6%. Revenue in the current fiscal year is expected to climb 10% to $39.507 billion, per FactSet.
Visa Reaches Buy Point
Visa stock — which is one of the 30 in the Dow Jones Industrial Average — is forming a cuplike base with a 366.54 buy point. Today, it is rising above a four-day period of tight trading that offers an alternative entry at 351.05. That price level almost coincides with the 351.86 high on March 31.
The relative strength line is near new highs, and gets a blue dot on its weekly IBD MarketSurge chart.
Visa stock has a 21-day average true range (ATR) of 2.71%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
There are exceptions, but given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
Visa stock has a Composite Rating of 96, third highest of 36 stocks in IBD's credit card and payment processing industry group.
