Visa Posts Strong Q1 Results; Street Says Buy

Financial services major Visa Inc. (NYSE: V) has reported better-than-expected results for the quarter ended December 31, 2021, on the back of robust growth in net revenues.

Following the upbeat earnings, shares of the company rose 5.3% to close at $217 in Thursday’s extended trading session.

Revenue & Earnings

Visa reported quarterly net revenues of $7.1 billion, up 24% from the prior year. Moreover, the figure surpassed the consensus estimate of $6.79 billion. Year-over-year growth of 19% and 50% in service revenues and international transaction revenues, respectively, drove the overall growth in net revenues. Together, these two components accounted for 76% of the total quarterly net revenues of the company.

Earnings per share (EPS) for the quarter stood at $1.81, up 27% from the previous year. Further, the figure topped the consensus estimate of $1.70.

Key Operating Metrics

Visa’s payments volume for the quarter increased 20% from the prior year on a constant dollar basis while total processed transactions witnessed a rise of 21% from the year-ago period.

Notably, the company also repurchased 19.4 million shares of class A common stock at an average price of $210.05 per share for $4.1 billion till December 31, 2021. On December 13, 2021, the board of directors authorized a new $12 billion class A common stock share repurchase program.

Management Commentary

The CEO of Visa, Alfred F. Kelly, Jr., said, “Visa delivered very strong results with revenue, net income and EPS all growing at 24% or higher. The strength of our network, the growth in eCommerce, better than expected progress in the return of cross-border travel and a continuation of the recovery all contributed to an excellent quarter.”

Stock Rating

Recently, Mizuho Securities analyst Dan Dolev reiterated a Hold rating on the stock with a price target of $220, which implies upside potential of 6.7% from current levels.

Wall Street’s Top Analysts have awarded Visa a Strong Buy consensus rating based on 12 Buys and 2 Holds. The average Visa price target of $265 implies upside potential of 28.6% from current levels. Shares have gained 4% over the past year.

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