KBW: Mobile Payments Leader Visa and the “Abundance of Momentum”

July 30, 2019         By: Steven Anderson

Recently, Visa brought out its latest earnings report on an investor call, and Keefe, Bruyette & Woods (KBW) were on hand to get the news presented therein. They sent a copy of their findings out our way, and the good news here is that this titan of the mobile payments field is looking pretty sharp, with only a few minor hiccups separating it from nothing negative to mention.

The KBW report on Visa’s report noted that the basic, fundamental trends were on “…a very solid footing,” and that management itself was feeling good about things, noting that it was making “traction” on pretty much every point in the field.

However, that traction didn’t come without the introduction of “unexpected headwinds” this year, the KBW report notes. Surprise weakness in the cross-border market early in 2019, as well as an overall reduction in currency volatility hampered gains to at least some extent. Given that Visa was able to raise its earnings per share (EPS) guidance range, it’s safe to say these headwinds will have limited impact on the overall course of earnings.

The picture isn’t all rosy, as KBW is looking at some “…transitory impacts over the short run,” and “more color in October.” It’s easy to forget, but some of the biggest spending seasons of the year are coming up, including back to school shopping time and the holiday shopping season. Yet some unknowns will haunt Visa to at least some extent, like potential hikes in integration expenses for some recent merger and acquisition (M&A) activity as well as a potential change in cross-border volume growth. Yet with Chase agreeing to extend a 10-year deal, and the business-to-business (B2B) market still representing an “immense” market, things are looking at least kind of bright going forward.

Basically, the market for Visa isn’t looking half bad. Things could definitely be worse and it’s got a lot of positive indicators going for it. While there are some potential drags on Visa’s market—and no one really knows what will happen economically in six months—things are actually looking reasonably bright right now. Visa certainly has the resources to take advantage of these positive points and ride them accordingly.

Only time will tell how things turn out for Visa in the next quarter, but right now, this mobile payments kingpin is sitting fairly pretty as things go.