Visa: Up 15% Year-To-Date, With More Upside to Come
Company Update (V US) (Buy)
Highlights
Shares have risen 15% YTD to be at 30x CY22 EPS
We expect a 14% EPS CAGR and re-rating to 35x P/E
Q3 FY23 should see few surprises; consumer is resilient
Recent events show there are few risks except governments
At $237.97, we see 91% upside (22.3% p.a.) by Sep-26. Buy
Introduction
We review our Buy rating on Visa ahead of Q3 FY23 results scheduled for July 27 (post-market), and after Visa’s share price has risen 15% year-to-date to reach a new 52-week high.
We believe Visa shares still offer the potential of a 20%+ annualized return by September 2026, driven by an approximately 14% EPS CAGR and its P/E re-rating from 30x to 35x. H1 FY23 results and management outlook imply Adjusted EPS will grow by 14% in FY23. Transaction volume has already been disclosed for 2 of the 3 months in Q3 FY23, Q3 results should be in line with expectations, though there may be some non-operational headwinds from currency and a tax hike in Brazil. The U.S. consumer continues to be resilient. Visa’s “ne…