Visa Is the Worst Dow Stock Wednesday. Here's Why

(Image credit: Jakub Porzycki/NurPhoto via Getty Images)

published 24 July 2024

Visa (V) is the worst Dow Jones stock Wednesday after the payments giant came up short on both the top- and bottom-lines in its fiscal third quarter.

In the three months ended June 30, Visa's revenue increased 10% year-over-year to $8.9 billion, driven by a 7% increase in payments volume, a 14% rise in cross-border volume and a 10% jump in processed transactions. Its earnings per share (EPS) rose 12% from the year-ago period to $2.42.

The company's strong quarter was helped by stability in its key business drivers, including processed transactions, said Visa CEO Ryan McInerney in a statement. "During the quarter, we expanded our partnerships with many clients around the world and announced several new innovations that will help drive the future of commerce."

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Still, Visa's results fell short of analysts' expectations. Wall Street was anticipating revenue of $8.96 billion and earnings of $2.43 per share, according to Bloomberg.

On the Visa's conference call, Chief Financial Officer Chris Suh said the company expects payments volume and processed transactions to grow at a similar rate in the final quarter of its fiscal year, while cross-border volume is expected to be slightly lower.

"Pulling it all together, we expect adjusted net revenue growth in the low double digits, which equates to a slight improvement from the 10% adjusted revenue growth rate in the third quarter," Suh said. He added that earnings per share is forecast to grow "in the high end of low double digits."

Is Visa stock a buy, sell or hold?

Visa shares are in negative territory on a year-to-date basis, but Wall Street is bullish on the blue chip stock. According to S&P Global Market Intelligence, the average analyst target price for V stock is $304.58, representing implied upside of about 19% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm William Blair is bullish on Visa and thinks market participants should be buying the stock.

"We reiterate our Outperform [the equivalent of a Buy]rating and recommend investors allocate new investment dollars to Visa," William Blair analyst Andrew Jeffrey writes in a note to clients. "Our view remains that Visa is a core fintech holding, and we believe that the stock offers through-the-cycle outperformance and relative insulation from momentum-driven technology strategies."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.