Visa, Inc. (V) has experienced market volatility in 2022, though the company outperformed the S&P 500 and hedge funds were buying. Visa rose by approximately 6.5% compared to the S&P 500’s gain of about 4.1% over the past year. However, the stock slid on the WhaleWisdom HeatMap to nineteen from ten.
Visa is a global financial services and technology company known for connecting consumers, businesses, banks, and governments through electronic payments and transfers. Visa’s services range from providing credit, debit, and prepaid card services to authorization and settlement services. The company makes money through interest and fees charged on these services, acting as a go-between between merchants and financial institutions. The company’s data processing operations generate the most significant portion of revenue.
Visa saw a boost in demand for its services in the first year of the coronavirus pandemic, as quarantined consumers relied heavily on using credit and debit cards to shop to remain contactless. As pandemic restrictions lifted, some consumers returned to using cash, impacting Visa’s revenue growth. However, many consumers have formed new buying habits and continue to prefer paying for things with credit and debit cards.
Hedge Funds Added to Holdings
Visa is a leader in payments and technology, and hedge funds actively bought stock in the fourth quarter. The aggregate 13F shares held by hedge funds increased to about 443.5 million from 428.0 million, an increase of approximately 3.6%. Of the hedge funds, 61 created new positions, 219 added to an existing one, 53 exited, and 184 reduced their stakes. Overall, institutions were selling and decreased their aggregate holdings by about 0.6% to approximately 1.55 billion from 1.56 billion. The 13F metrics from 2008 through early 2022 show that stock prices have steadily risen.
Encouraging Earnings Projection
Analysts expect to see earnings rise in the next two years, with earnings per share predicted at $7.09 by September 2022 and $8.40 by September 2023. Year-over-year estimated increases could bring revenue growth to approximately 32.4 billion by September 2023, up from the anticipated revenue of 28.5 billion for 2022.
Analysts Share a Range of Ratings
Analysts appear cautious about Visa, with fluctuations in ratings in all directions. AnnaMaria Andriotis of the Wall Street Journal shared that Visa will raise the fees that many large merchants pay to be able to accept consumers’ credit cards. Raising fees appears to be an overdue move delayed temporarily due to the pandemic. Analyst Ramsey El-Assal of Barclays lowered the firm’s price target to $260 from $265 while maintaining an Overweight rating on shares. Mizuho Securities analyst Dan Dolev responded to fourth-quarter results by raising his firm’s price target to $235 from $220. Dolev also maintained a Neutral rating on Visa’s shares. Moshe Katri of Wedbush Securities kept an Outperform rating on Visa and raised the firm’s price target to $270 from $240. Morgan Stanley analyst James Faucette kept an Overweight rating and raised the price target on Visa to $283 from $280.
Optimism Beyond 2022
Visa continues to have positive brand recognition in the global payment industry. Recent share fluctuation may make investors cautious, but earnings and revenue forecast through 2023 offer cause for optimism. Visa remains a stock to watch.