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Visa (V) Hits 52-Week High on Strong Results, Recent Deals


On May 15, the stock of Visa Inc. V hit a 52-week high of $93.42. The rise in the stock is believed to have been driven by strong fiscal second-quarter results as well as the signing up of recent deals and renewal agreements.

Over the past year, the stock has returned 21.7%, outperforming the 18.6% gain of the Zacks categorized Financial Transaction Services industry and 17% gain of the S&P 500 index.

The company’s earnings of 86 cents per share, beat the Zacks Consensus Estimate by 8.9% and also improved 27% year over year. Net operating revenue of $4.5 billion surpassed the Zacks Consensus Estimate of $4.2 billion and revenues climbed 23% year over year. This upside was primarily driven by the acquisition of Visa Europe and consistent growth in cross-border volume and processed transactions.

The results reflected broad-based growth with solid payment volume growth, a double-digit increase in cross-border revenue and healthy operating metrics from all the regions.

Investors also favorably view a number of deal wins and renewals that drive transaction volume growth. In North America, Visa renewed a multi-year credit, debit, commercial and prepaid partnership with PNC Financial Services Group. It also renewed a multi-year debit agreement with Citizens Bank and multi-year credit and debit agreements with First National Bank of Omaha.

On the co-brand side, Visa renewed an important credit card relationship of Hyatt Hotels and Resorts. In Asia Pacific, Visa signed a 10-year exclusive partnership with ANZ Bank. In both Australia and New Zealand, it also signed a commercial credit partnership with Citibank covering multiple markets in Asia Pacific.

In Taiwan, Visa signed a multi-year credit and debit agreement with CTBC Bank Taiwan. In its Latin America region, Banco Popular de Puerto Rico, the largest bank in credit card issuer in Puerto Rico renewed a multi-year credit and debit partnership. In Europe, Visa signed a PAN-Nordic debit renewal with Nordea Bank and a commercial and consumer card renewal with BNP Paribas Group in France.

In addition to these renewals, Visa signed a number of key partnerships. It announced the IBM Watson partnership to help support payments in the Internet of Things and encourage the usage of tokenization.

Visa also executed the PayPal partnership in Asia Pacific, which is an extension of its partnership in the United States. This partnership will assertain transaction data sharing and offer enhanced consumer experience.

Recently, Visa announced the launch of an enhanced transaction data capability for Amazon business customers in the United States. This enables participating issuers to provide their U.S. commercial account holders a comprehensive view of their Amazon business purchases including full-line item details on purchases made with their Visa commercial card that integrates with popular reconciliation tools.

Investors are also impressed with the company’s digital expansion efforts that made great progress in fiscal second quarter. Visa Checkout has seen tremendous growth and now provides services to more than 20 million enrolled accounts.

Additional brand merchants are adopting Visa Checkout to improve their online shopping experience. And the growing list of over 300,000 merchants now includes Alaska Airlines, Avis, Marriott and Walmart, among others.

Visa carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other players from the space with the same Zacks Rank are Total System Services Inc. TSS, Vantiv, Inc. VNTV, and Financial Engines, Inc. FNGN. The bottom line at Total System, Vantiv and Financial Engines beat their estimates by 8.22%, 3.28% and 8.7%, respectively.

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