Visa Trades Lower On Concerns Over Next Year's Growth

© Reuters.

by Daniel Shvartsman — Visa (NYSE:) shares dropped 5% on Wednesday despite beating estimates on their fiscal year Q4 earnings report Tuesday, as investors appear concerned by the outlook for the year ahead.

The payments company posted $1.65/share GAAP earnings, as well as $6.6 billion, both beats compared to analyst estimates. Processed transactions increased 21% year over year, while payments increased 17%, and cross-border volume grew 38%, a sign of increased travel activity last summer. CEO Al Kelly said, “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.”

The company’s guidance for their fiscal Q1 is for “high teens,” with expected moderation through the rest of the year as they lap the pandemic spending recovery experienced this year.

Analyst reactions included maintaining buy ratings but lowering price targets. Per StreetInsider, Raymond James analyst John Davis said, “while the estimate reset is no doubt frustrating as it likely keeps the stock range bound near-term, it should set the table for the company to beat and raise throughout 2022 as crossborder travel recovers barring any further COVID related hiccups.” RBC analyst Daniel Perlin wrote that, ““FQ4/21 print and guidance suggest that the US consumer continues to rebound, with travel & restaurant spending improving, ecommerce remaining healthy (albeit slightly lower), credit accelerating, with debit remaining relatively stable. Incorporating guidance we are reducing our FY22 estimates.”

Concerns over muted spending growth are having knock-on effects for other credit card companies, with Mastercard (NYSE:) down over 6%, Discover Financial Services (NYSE:) down nearly 5%, and Capital One Financial Corporation (NYSE:), which also reported yesterday, is down 7%. American Express (NYSE:) has been the outlier, down only half a percent.

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