Visa Inc. (NYSE: V), the global payments giant, has reported third-quarter revenue growth that fell short of Wall Street expectations, a rare miss for the world’s largest payments processor.
The company’s quarterly net revenue came in at $8.90 billion, just shy of analysts’ estimates of $8.92 billion, leading to a drop in its shares during extended trading. This revenue miss, has prompted several brokerages to revise their price targets on Visa’s stock.
Despite the revenue miss, Visa Inc. reported solid financial results for the third quarter of fiscal year 2024. The net revenue of $8.9 billion marked a 10% increase year-over-year, and the company’s earnings per share (EPS) rose by 12%.
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However, a few factors played a role in the slight revenue shortfall. High interest rates from the Federal Reserve, aimed at combating inflation, have tightened budgets for lower-income Americans, reducing their spending power.
In the Asia-Pacific region, economic challenges in China and a slower-than-expected recovery in travel demand have affected payments growth.
In the U.S., Visa experienced a slowdown in payment volumes. However, on a positive note, while international travel demand remained strong, transactions excluding those within Europe jumped by 14%.
Analysts respond to Visa’s revenue miss with adjusted price targets
Visa’s revenue miss led multiple analysts to lower their price targets for the company, reflecting concerns about its near-term growth prospects.
Jefferies, for instance, lowered its target from $325 to $300, citing the revenue miss and slowing July trends. They maintained an overweight rating, noting that they don’t see a near-term catalyst for a positive narrative change as cross-border growth slows.
Morgan Stanley also adjusted its target, reducing it from $326 to $322. Despite the lower growth forecasts, Morgan Stanley remains optimistic about Visa’s future, expecting a 12.4% EPS growth for 2025.
Other firms, including Piper Sandler, TD Cowen, Citi (NYSE: C), and JPMorgan Chase (NYSE: JPM), made modest cuts to their price targets.
However, none of these firms downgraded Visa’s shares, indicating a cautious but not overly pessimistic outlook on the company’s near-term prospects.
Despite these factors, Visa’s solid financial foundation and growth in certain areas highlight its strength. The revisions to the price targets by major brokerages reflect a cautious approach, balancing short-term concerns with long-term potential.
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