Bernstein maintains Outperform rating on Visa shares, increases target by 16%

EditorAhmed Abdulazez Abdulkadir
Published 13/01/2025, 08:30 am

On Friday, Bernstein analysts, led by Harshita Rawat, increased their price target for Visa (NYSE:V) shares to $378 from the previous target of $327, while reaffirming their Outperform rating on the stock. Currently trading at $516.40, Visa's stock has shown strong momentum with a 21% return over the past year.

The adjustment reflects a positive outlook on Visa's growth prospects, particularly in international markets. According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $464 to $654.

The analysts highlighted that while U.S. consumer card volume growth is nearing maturity, the international sector presents substantial opportunities for expansion. Supporting this view, InvestingPro data shows Visa maintaining strong revenue growth of 11.7% over the last twelve months.

They noted that the market's concerns regarding the alignment of U.S. personal consumption expenditures (PCE) and card volume growth signaling market maturity might be overstated. According to Bernstein, the deceleration of card volume growth in the U.S. is often exaggerated and not as critical as it is perceived to be.

Visa's upcoming investor day in February is anticipated to bolster confidence in the company's continued revenue growth potential, stemming from services and new payment flows. Bernstein also sees a possibility for card volume growth to outpace PCE due to factors such as inflation, the cycling of Regulation II headwinds, and Visa's relatively low valuation, which is in the bottom decile compared to the last ten years.

Moreover, the analysts pointed out that foreign exchange volatility could serve as a tailwind for Visa in 2025. They also mentioned the potential for pricing actions, such as those related to tokenization, where Mastercard (NYSE:MA) has already started to implement pricing strategies in international markets. While both Visa and Mastercard hold Outperform ratings, Bernstein expressed a slight preference for Visa in the year 2025.

In other recent news, Mastercard has been the focus of multiple developments. The company's board has approved a $12 billion share buyback program and raised its quarterly dividend from 66 cents per share to 76 cents per share. The new repurchase program will commence after the completion of the ongoing $11 billion program. In the meantime, Keefe, Bruyette & Woods (KBW) has expressed optimism about Mastercard's performance, despite potential headwinds from foreign exchange and fuel prices.

The financial services giant has also reached an in-principle agreement to settle a legal claim accusing the company of imposing unjustly high fees on card transactions in the UK. The specifics of the settlement, however, remain undisclosed. In addition to this, TD Cowen has maintained a positive outlook on Mastercard, raising its price target to $567 based on the company's robust and sustainable growth potential, as highlighted during the company's recent investor day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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