V - Embedded Expectations Analysis - 2021 06 15
Visa Inc. (V:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 37.9x Uniform P/E, implying bullish expectations for the firm. However, although management concerns about volume growth, buy now pay later (BNPL), and their B2B and Direct platforms suggest the potential for near-term headwinds, market expectations are still too pessimistic. As such, longer-term outperformance remains warrantedSpecifically, management may lack confidence in their ability to maintain volume growth in cross border transactions, commercialize their existing and new use cases, and continue capitalizing on buy now pay later (BNPL) opportunities. Also, they may be overstating the potential of their global growth agreement with Crypto.com as well as the utility of CyberSource. In addition, they may have concerns about the impact of government interest in digitization and the pace of the recovery of card-present spending amidst e-commerce strength. Furthermore, they may be overstating the opportunity to enable digital currency cash-outs to fiat and the capabilities of their Visa B2B and Visa Direct products
Although management may have concerns about volume growth, BNPL, and their B2B and Direct products, market expectations are still too pessimistic given the firm's digital solutions growth opportunities and oligopolistic position. As such, longer-term outperformance remains warranted
Visa is engaged in digital payments. The company facilitates payments between consumers and businesses. The company is focused on its proprietary network, VisaNet, to provide products and services. The company provides a portfolio of business payment solutions, including small business, corporate (travel) cards, purchasing cards, virtual cards/digital credentials, non-card cross-border business-to-business payment options and disbursement accounts, covering various main industry segments around the world. The company also provides several capabilities and services, including fraud prevention and security, processing, loyalty, merchant and digital solutions, consulting and data solutions.
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