On Aug 30, shares of Visa, Inc. V hit a 52-week high of $147.30, before closing the day at $146.74.
Visa has been riding high on the back of a number of recent deals, partnerships and investments in technology. Further, the company’s strong performance for the first nine months of fiscal 2018 fueled stock.
Last but not the least, the stock must have gained from the overall rise in the broader indexes.
The stock declined briefly following the fiscal third-quarter results but has been on the rise this month. Recent announcement of investment in Paidy also seemed to have aided the stock.
In a year’s time the stock has gained 41% compared with the industry’s growth of 36%.
Earlier during the month, the company made an investment in Paidy, a fintech startup in the payments space, via Series C funding. This investment is likely to help the company’s penetrate further in digital payments space. In fact, Visa is very active when it comes to technological advancements.
In May, the company made a strategic investment in YellowPepper, a mobile payments pioneer to help accelerate innovation in digital payment technology. Through this investment, Visa will focus on growing tokenized payment opportunities, increasing access to its APIs, expanding the usage of push payments via Visa Direct. Together, the company is already working with more than 70 clients in the region.
In recent months, Visa’s has also entered partnership with a number of carriers to expand its offerings via Visa Direct. It recently partnered with MoneyGram International Inc. MGI, Postmates, On Deck Capital, Inc. ONDK, WEX Inc WEX. Via MoneyGram, the second largest money transfer provider globally, the company aims to deliver domestic and cross-border remittances utilizing debit credentials to receive funds. Cross-border remittances market is an attractive space that currently holds a lot of potential.
Postmates, a logistics company that operates a network of couriers which deliver goods locally will help Visa to enable instant payouts to the delivery couriers in their fleet.
Visa plans to utilize OnDeck’s new Instant Funding feature for lines of credit for small businesses. Once a business registers their Visa Debit card, they can make a drawdown and receive their money transfer in seconds any time, day or night.
Investors are impressed with Visa’s concerted efforts to expand in the Business to Business (B2B) market which is a $20 trillion market. B2B payments through existing solutions represents over 11% of Visa's payment volume and are growing at a faster rate than Visa overall. Considering that fact, it has tied up with WEX which allows its corporate payment customers to use a Visa virtual card to enable global B2B payment.
Contactless payments is another area where Visa anticipates substantial growth. Transit provides unlimited opportunities for growth of contactless payments. In this line, Visa has tied up with TransLink in Vancouver and Azienda Trasporti in Milan. Later this summer, Visa will be providing its contactless payments services at MetrôRio, Rio's largest transit operator with 240 million annual riders. Services to Integrated Ticketing System in Mumbai in India and the New Jersey Transit agency in the United States will also be rolled out soon.
Is Further Upside Left?
We except the company’s business to gain from the strong U.S macroeconomic fundamentals which is expected to continue. Increasing retail sales, strong consumer spending should lead to an increase in payments volumes which is likely to result in the company’s top-line growth.
The stock has witnessed the Zacks Consensus Estimate for both current year and 2019 earnings being revised 0.6% upward over the last 30 days. This reflects analyst’s optimism over the stock.
Visa carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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