Visa: Under-Appreciated Resilience & Growth After Q2 FY22

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

Summary

• Visa shares have fallen approx. 10% in the past year and now trade at 33x CY21 EPS; its growth and resilience are under-appreciated.

• Q2 FY22 results confirmed its continuing structural growth and recovery from COVID-19, with EPS up 30% year-on-year.

• The exit from Russian will be mostly offset by growth; FY22 outlook was only reduced slightly and reiterated at a recent conference.

• Inflation is a net positive for Visa and it should be resilient in any downturn. The dispute with Amazon has been fully resolved.

• With shares at $203.84, we expect a total return of 103% (23.9% annualized) by September 2025, mostly driven by EPS growth.

Introduction

We review our investment case on Visa Inc. based on developments in the past few months. Visa shares have fallen approximately 10% in the past year and are down 19% from their peak last July

We initiated our Buy rating on Visa (along with Mastercard) in June 2019. Since then Visa stock has gained 27% (including dividends), but with an extended per…