Visa, Inc. (NYSE:V)

CAPS Rating: 4 out of 5

Visa operates a global electronic payments network, allowing customers to use credit cards instead of cash.


Player Avatar RallyCry (< 20) Submitted: 5/2/2011 11:18:08 PM : Outperform Start Price: $74.00 V Score: +202.63

I usually try to give a compelling valuation reason why a stock will move up. The technicals here are an even more impressive reason. The stock took a big hit on debit card fee legislation concerns in late 2010 and has based in the mid 70's. Lately V has shown signs of a uptrend in the high 70's. If it can clear $80.90, there is little resistance to the $85.68 area. Valuation-wise $5.51 per share in earnings for 2012 is consensus mean estimate. A PEG of .85 and a forward P/E of 14 is just too cheap for such a major cash flow generator at an average of 900 million in opearing cash flow over the last 4 quarters. Applying a modest foward P/E of 15 times 2012 projected earnings of $5.23 per share (5% below 2012 mean est.) values Visa at $78.45 plus cash per share of $5.45. Therefore, my 6-12 month price target is $83.90 or 5.6% above current market prices. If you want a blended approach, take my technical target of $85.68 and average it with my valuation target of $83.90 and you arrive at $84.79 or 6.6% above market price of $79.14. If the next two quarters of earnings are robust, I will have to revise my 2012 estimate and $90 is not out of the question before 2011 ends.

Report this Post 5 Replies
Member Avatar HarryCaraysGhost (99.60) Submitted: 5/3/2011 7:36:37 PM
Recs: 1

Nice pitch man. I totally agree.

Member Avatar deputidave (37.65) Submitted: 6/16/2011 9:51:34 PM
Recs: 0

Yeah, I like that, sounds good.

Member Avatar RallyCry (< 20) Submitted: 6/29/2011 4:33:36 PM
Recs: 0

Big move today on the swipe fee increase has V sitting slighly above my target price. I'll take a look at what the analysts have to say and revise the target if need be.

Member Avatar RallyCry (< 20) Submitted: 11/23/2011 1:32:39 PM
Recs: 0

Revisiting Visa here in late November 2011, analysts are looking for $6.80 as the consensus estimate for 2013. If we stick with applying a reasonable forward P/E of 15 times 2013 consensus, the new price target in the next 6-12 months is now lifted to $102 or about 13% above the current price of $90.46. Visa continues to deliver huge operating cash flow each quarter, so I am comfortable with this target.

Member Avatar HarryCaraysGhost (99.60) Submitted: 12/21/2011 12:40:01 AM
Recs: 0

Trip digits today.

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