Visa: Potential To Double Your Money In 3 Years

(Preview) Company Update (V US) (Buy)

Summary

• Visa is one of the most attractive stocks in our coverage. We expect a total return of 113% (27.9% annualized) by September 2025.

• Returns will mostly be driven by an FY21-25 EPS CAGR of 16.8%, including a post-COVID rebound of 25.0% in FY22.

• Even with COVID-19, Visa had an EPS CAGR of 11.6% across FY17-21; before the pandemic intervened, the CAGR was 25.1% in FY17-19.

• All of Visa's growth engines are working and, for Q1-Q3 of FY22, EPS is up 29.8% year-on-year; Q4 guidance implies a strong finish.

• At $209.82, Visa shares are trading at 32.6x CY21 EPS and 28.3x expected FY22 EPS. We expect a re-rating up to 40x.

Introduction

We review our investment case on Visa Inc. after shares have stagnated in the month since the company released strong Q3 FY22 results (on July 26), which we believe represent an exceptional bargain for investors.

We initiated our Buy rating on Visa (and on Mastercard) in June 2019. The total gain on Visa stock (including dividends) since our initiation stands at 29…