Visa Inc (NYSE: V) has reported the adjusted earnings per Class A share growth of 86 cents in the first quarter, beating the analysts’ estimates for the adjusted earnings per share of 78 cents. The net income grew 6.6 percent to $2.07 billion in the Q1 2017. The company had reported the adjusted net operating revenue growth of 25 percent to $4.46 billion in the first quarter 2017, beating the analysts’ estimates for the net operating revenue of $4.29 billion as more people made payments using its network. As a result, the stock rose over 3.4% during the after-hour’s market session on February 1st, 2017.
The stock could open on a positive note today given their decent results. The group’s competitor MasterCard, which is the world’s second-biggest payments processor, has reported a lower-than-expected quarterly revenue last week, hurt by a rise in rebates, incentives and a strong U.S. dollar.
Visa, like MasterCard Inc and its other peers, has been trying to capture the Chinese market that is dominated by state-run China UnionPay Co Ltd. V remains committed to China in the long-term and has planned to formally submit a license application in the country.
Visa’s annual revenue jumped nearly 45 percent and the company’s reunion with Visa Europe had closed in June last year. The acquisition has led to growth of 39 percent to $1.8 trillion of Visa’s total payments volume on a constant dollar basis in the first quarter, exceeding the 11 percent growth in the year-ago quarter. The United States accounts for nearly 45 percent of V’s total payments volume in the quarter ended December 31st, and Europe accounted for nearly 20 percent. Therefore, the total processed transactions increased 44 percent to 27.3 billion and Cross-border volumes grew 140 percent on a constant dollar basis.
Visa expects the annual net revenue growth in the range of 16% to 18% on a nominal dollar basis for 2017, including the 2.0 to 2.5 ppts of negative foreign currency impact and annual class A common stock earnings per share growth to low 30s on a GAAP nominal dollar basis and mid-teens on an adjusted, non-GAAP nominal dollar basis, both including 2.5 to 3.0 ppts of negative foreign currency impact. Further, the company expects to see good momentum in the business due to the domestic and cross-border volumes, increase of consumer participation in electronic payments in developing markets, and the further acceleration of e-commerce in developed markets.
Visa stock has risen 10.5% in the last one year (source: Google Finance) while has an average price target of $94.33, which is a further upside of 14.62%.