Credit card giant’s share rises to $126 with positive outlook in quarterly report.
Over the past few months, Visa has been watching its stock climb as it has unveiled various innovations and initiatives that have strengthened the company’s future outlook with investors in emerging markets and mobile commerce.
The quarterly report from the company has shown that its performance has been very strong and that these favorable results will continue along with those of its competitors at American Express and MasterCard.
For this reason, its stock estimate has been revised to $126 by Forbes.
This is at a 10 percent premium to the current market price of the Visa stock. There were several factors that were taken into account to calculate this forecast. They include the following:
• Advancements in technology – the adoption of smartphones is currently skyrocketing and has thrown open the doors for mobile commerce across many industries. With this, the creation of payments using these devices and NFC (near field communication) technology has exponentially increased the company’s opportunities.
Visa is now in an ideal place to partner with smartphone payment pioneers such as Isis and Google Wallet, and has its own mobile wallet service V.me in the wings, which will be launched later this year in Europe.
• Strong developing market performance – the emerging economies across Latin America and the Asia-Pacific have created a recent boom for companies like Visa. There was a 25 percent Visa payment volume increase in Latin America over the last year, which virtually mirrored that seen in the Asia-Pacific.
• Boost from the Olympics – the 2012 Olympic games are using Visa as their official payment service provider this summer in London. For this reason, the company expects a significant increase in payment volume throughout that time using the 140,000 contactless terminals that have been put in place across the country. With the tourism generated by the Olympics, cross-border transactions are also expected to rise.
• Reforms in regulation – the Dodd-Frank financial overhaul bill’s Durbin Amendment in 2011 decreased the fees charged per transaction by the company. Though this caused a revenues decline per transaction, it is likely to be offset by the volume increases.
As mobile commerce and other opportunities have continued to increase, the United States alone saw a 6 percent increase in 2011’s last quarter. This growth should be maintained over the months to come.