Visa Trading forecasts and signals

The market the day beforeThe main American stock indexes ended the trading session on April 27 with weak growth. The S&P 500 rose 0.21% to 4,184 points, the Nasdaq lost only 0.01%, the Dow Jones rose 0.19%. The energy and raw materials industries looked better than the market, which added 1.48% each. Among the outsiders were the communications sector (-2.62%) and real estate (-0.68%).Company newsEnphase Energy (ENPH: +7.72%) surpassed consensus revenue and profit forecasts, overcoming the negative impact of supply chain disruptions and expanding its presence in Europe. Management also presented a strong guidance for the current quarter.Visa (V: +6.47%) once again demonstrated strong growth in the volume of payments and profits, exceeding analysts' expectations, despite the negative impact of high inflation. Withdrawal from the Russian market did not put significant pressure on the metrics of the payment network.Alphabet (GOOGL: -3.67%) did not meet expectations in terms of revenue and EPS for the first quarter, reporting a slowdown in the growth of YouTube advertising revenue due to the negative impact of geopolitics. The company announced a new $70 billion buy back program.We expectThe latest data on the state of the real estate market in the United States turned out to be weaker than expected. The index of incomplete sales in the secondary housing market in March adjusted more than expected — by 1.2% mom and 8.2% YoY, reaching the lowest level since May last year. The National Association of Realtors of the USA (NAR) notes that the reduction in the number of signed contracts for the purchase of housing indicates a trend of normalization of the market. Rising mortgage lending rates and limited refinancing opportunities have become key factors in cooling demand for real estate. The average mortgage rate for 30 years in the United States has already returned to the levels of 2011, reaching 5.11%. This year, NAR expects sales to decline by 9% YoY. Although the cost of housing is still held at high levels, annual price growth is expected to slow down to 8% compared to 17.1% in 2021. In the latest report, one of the leading US developers D.R. Horton, Inc. (DHI) noted that although the number of applications for mortgage loans is declining, demand still exceeds supply in the market, as instability in the supply of raw materials and materials continues to put pressure on the pace of construction. At the same time, Goldman Sachs expects construction volumes to grow by 5% this year, despite a decrease in the forecast of real capital investment. Thus, cooling demand and filling the supply deficit as supplies normalize in the market can contribute to a gradual rebalancing and slowing down the growth of housing prices as an inflationary factor.The indices of the main stock exchanges of the Asia-Pacific region closed trading on April 28 in the black. Japan's Nikkei gained 1.75%, China's CSI 300 rose 0.66%, Hong Kong's Hang Seng rose 1.65%. EuroStoxx 50 gained 1.90% from the opening of trading.The price of Brent crude oil futures dropped to $105 per barrel. Gold is trading at $1,885 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4180-4260 points.MacrostatisticsData on the dynamics of US GDP for the first quarter will be published today. The economic growth rate is expected to slow down to 1.1% QoQ compared to 6.9% QoQ in October-December 2021.Sentiment IndexThe sentiment index dropped 1 point to 41.Technical pictureAfter the breakdown of the support line at 4,200 points, the S&P 500 continued to test the lows of March. The RSI, which has approached the oversold zone, and the MACD signals confirm the strength of the "bearish" trend. A number of already published positive reports and the upcoming release of financial results of large corporations can provide the benchmark with short-term growth drivers. If the Fed meeting does not bring surprises, the index may begin to recover. The nearest resistance is located at the level of 4,300 ...

The market the day beforeThe trading session on March 3 for the main US stock indexes ended with a decline. The S&P 500 dropped 0.53% to 4,363 points, the Dow Jones dropped 0.29%, and the Nasdaq lost 1.56%. At the same time, seven of the eleven sectors from the broad market index closed in the black: among them, the utilities sector showed the best dynamics (+1.72%), real estate (+1.1%) and non-cyclical consumer goods (+0.72%). The securities of producers of cyclical consumer goods (-2.29%) and the IT sector (-1.24) looked worse than the market as a whole.Company newsVisa Inc (V: -1.81%) has been reducing exchange rates for both online and personal consumer credit transactions for 90% of US businesses since April. This measure is aimed at overcoming the negative consequences of the coronacrisis for sellers as soon as possible.Walt Disney (DIS: -1.44%) is discussing the creation of a budget version of its ad-supported video streaming service Disney+.Panasonic (PCRFY: -0.9%) plans to build a plant worth several billion dollars in the United States to supply lithium-ion batteries to Tesla (TSLA: -4.6%).ExpectationsWTI crude oil fell in price yesterday morning after reports that a nuclear deal with Iran could be signed within the next 72 hours. In this case, Iran will be able to export more hydrocarbons. According to the country's oil minister, supplies can be increased to 2 million barrels per day within two months after the deal is concluded. Earlier, WTI crude oil rose above $116 per barrel, the highest level since the "Arab Spring". Bloomberg reported that Congress is considering additional options to stop the import of Russian oil and gas to the United States. As a result of the relevant decisions of the House of Representatives, the general license of the US Treasury to perform transactions with energy resources by Russian banks may be suspended. According to analysts, the only way to reduce oil prices is to weaken demand. Energy Aspects, whose representatives are quoted by Bloomberg, believe that liquid hydrocarbon raw materials may rise in price to $170-180 per barrel before demand for it begins to fall. BofA and JP Morgan analysts hold approximately the same opinion, provided that the volume of supplies from the Russian Federation continues to fall.The stock exchanges of the Asia-Pacific region at the auction on March 4 showed a downward trend. Japan's Nikkei fell by 2.23%, China's CSI 300 fell by 1.21%, Hong Kong's Hang Seng fell by 2.5%. EuroStoxx 50 has been losing 1.94% since the opening of trading.Brent crude futures reached $110.8 per barrel. The price of gold rose to $1941.5 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4320-4420 points.MacrostatisticsFebruary data on the number of new jobs outside agriculture will be published today (forecast: +400 thousand after +467 thousand in January) and on the unemployment rate (forecast: 3.9% vs. 4.0% in January). In addition, preliminary data on the dynamics of hourly wages for the past month will be released (forecast: +5.8% YoY versus +5.7% YoY oy in January).Sentiment IndexThe sentiment index remains at 39 points.Technical pictureThe S&P 500 is held in the range of 4,300-4,400 points for the fifth trading session in a row. On March 2, amid the recovery of the benchmark, the RSI returned to a neutral level. The MACD indicator indicates a short-term overcoming of the bearish trend, but the bulls' positions are still noticeably weaker. The short-term trend remains downward in anticipation of tighter financial conditions and increased market risks: yesterday there was a rebound from the upper limit of the descending channel, which may lead to a short-term reversal to a decline. The nearest support is located at the level of 4280 ...

The payment system operator Visa Inc. (V) has presented strong reporting for the first quarter of fiscal year 2022, which coincides with the fourth calendar quarter of 2021. Diluted EPS increased by 28.8% YoY to $1.83, which exceeded market expectations at $1.70. Net profit increased by 26.6% YoY to $3.96 billion. This was facilitated by an increase in net revenue by 24.1% YoY and 10.5% QoQ, to $7.06 billion, with a median forecast of $6.79 billion.At the same time, Visa's operating expenses increased by 24%, to $4.77 billion, due to salary increases, marketing costs and litigation ($148 million). The net profit margin was 56.1%.Visa's financial performance was provided by the resumption of tourism and consumer activity as a key driver of growth. The corporation's revenue from servicing cross-border operations (International Transaction Revenues) increased by 50% YoY, to $2.17 billion, accounting for 23% of gross revenue and becoming the third most important business area of the company. The total volume of processed transactions increased by 16.5% YoY and 5% QoQ, reaching $3.63 trillion. During the reporting quarter, 47.5 billion transactions (Processed Transactions) were processed, which is 21.3% higher than the previous year and 5% more than the quarter before.Revenues unrelated to the dynamics of cross-border operations continued to show strong growth. The main source of revenue, forming 38.3% of the total indicator, remains the payment processing division (Data Processing Revenues). Here, revenue increased by 19% YoY, to $3.61 billion. The volume of commission receipts for servicing operations within one country (Service Revenues) also increased by 19% YoY, reaching $3.19 billion. Revenue from data provision and analysis services increased by 17% YoY, to $449 million. Expenses on retrobonuses sent to clients (Client Incentives) increased by 28%, to $2.37 billion.Dividends and repurchase expenses for the reporting quarter amounted to $4.89 billion —$0.81 billion and $4.08 billion, respectively. Earlier, the board of directors approved a new buy back program worth $12 billion, it increased by $12.6 billion. In 2021, the company on average repurchased shares worth $2.2 billion quarterly. We assume that Visa will continue to carry out the repurchase until the end of the year, which is positive for the asset quotes. Visa's dividends for the reporting quarter were approved in the amount of $0.375 per share, which gives a yield of 0.71% per annum. Payments will take place in March.Our base target price for the Visa (V) stock on the horizon of the year is $240. We believe that the corporation maintains medium- and long-term growth prospects in the context of digitalization of the financial sector, and also continues to demonstrate strong marginality indicators and a stable balance ...

The market the day beforeOn January 28, trading on American stock exchanges ended in the green zone. The S&P 500 rose by 2.43% to 4432 points, the Dow Jones added 1.652%, the Nasdaq rose by 3.13%. The best dynamics were demonstrated by companies from the IT (+4.33%) and real estate (+3.38%) sectors on the back of positive quarterly results, as well as telecoms (+2.92%). Energy companies were outsiders (-0.6%).Company newsVisa (V: +10.6%) reported better than expected for the fourth quarter, noting the steady dynamics of international travel and e-commerce destinations, as well as only a slight negative impact on business due to the active spread of the omicron strain.Apple's report (AAPL: +7%) exceeded consensus expectations. There is a positive trend in the segment of phones and services against the background of less pressure from supply chains than previously predicted.Chevron's financial results (CVX: - 3.5%) for the 4th quarter of 2021 fell short of market-wide forecasts due to weak indicators of the international direction and uncertain guidance for 2022.ExpectationsThe attention of market participants is switching from assessing the strengthening of the "hawkish" mood of the Fed to the current reporting season. According to FactSet, just over a third of the S&P 500 companies have already reported results for the 4th quarter of 2021: 77% of the reported issuers exceeded the consensus forecast for EPS, which is below the average for the last four quarters (84%), but generally corresponds to the value for five years. On average, companies beat profit expectations by 4.1%, which is also significantly lower than the corresponding indicator for the last four quarters (15.8%). Although such results did not come as a big surprise to the market due to the effect of a low base in 2020, more and more analysts mention that the peak of profit and profitability growth has been passed. According to management comments, the strong demand observed in Q4 in many industries is offset by pressure from supply chains and rising purchase prices, which is expected to persist over the next few quarters. The companies also predict an increase in costs, some of which are associated with a shortage of labor, which, in turn, is largely due to the active spread of the omicron strain.Stock exchanges in Southeast Asia ended trading in the black. Tokyo's Nikkei index rose 1.07%, Hong Kong's Hang Seng gained 1.07%. Chinese markets are closed due to the national holiday. EuroStoxx 50 has been growing by 0.99% since the opening of trading.Risk appetite is uncertain. The yield of treasuries dropped to 1.78%. Brent crude futures are trading at $89 per barrel. The price of gold is $1,790 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4400-4450 points.MacrostatisticsThe Chicago PMI index for January will be published today. The indicator is expected to decline to 59.5 points compared to 64.3 in December, which, however, will continue to indicate an increase in business activity.Technical pictureThe S&P 500 remains below the 200-day moving average and shows high volatility. Probably, in the coming days, the index will test this level, the breaking of which up will serve as a signal for a reversal. The RSI returned from the oversold zone, rising to 40 points, which indicates a weakening of the "bearish" trend. The MACD indicator also indicates the possible completion of the downward movement, but there is no signal for a reversal yet. The nearest support is still in the area of 4,300 points.In sightOn February 1, the report for the fourth quarter will be presented by the largest integrated oil and gas company ExxonMobil (XOM). We expect strong results from the issuer due to the increase in prices for oil, gas and petroleum products. Revenue is expected to increase to $85 billion (+83% YoY, +15% QoQ) with an increase in adjusted net profit by 65 times in annual terms, to $1.94 per share (+23% QoQ). In addition, the company is likely to continue to reduce its debt burden: net debt may decrease by $ 4-5 billion. The focus of investors' attention will be on forecasts of operating results, the dynamics of expenses against the background of high inflation, as well as the results of the petrochemical segment, where prices declined after the peak values of the third quarter. In our opinion, the company's shares are trading above fair value, so positive reporting can be considered as a signal for profit-taking on XOM securities.Also, on February 1, the operator of the largest electronic payment system PayPal (PYPL) will report for the 4th quarter of 2021. According to FactSet estimates, the issuer will increase net revenue and EPS by 12.7% YoY and 3.7% YoY, to $6.89 billion and $1.12, respectively. As for other companies in the industry, the main driver of PYPL revenue growth is the volume of consumer spending. Taking into account the high activity of consumers during the winter holidays, the company can increase the amount of processed transactions by 24-30% YoY, up to $340 billion. The number of new active accounts for the quarter may reach 14 million, which will increase the total base to 430 million, including due to the recent acquisition of fintech Paidy. Over the past six months, PYPL shares have lost 45.81% due to a slowdown in the growth rate of the issuer's income in 2021 and sales in shares of technology companies "growth". A positive signal for PYPL quotes may be an increase in revenue compared to the 3rd quarter. The new partnership with Amazon came into effect earlier this year, but it is not expected to have a significant impact on PayPal's financial results, as this only compensates for the termination of business relations with eBay.On February 2, quarterly results of Meta Platforms Corporation (FB), formerly known as Facebook, are expected. This is a very important report for the company, as it will reveal for the first time the financial results of the Facebook Reality Labs division (revenue and operating loss), which, in our opinion, may lead to an increase in FB quotes, as investors will get an idea of the actual marginality of the main line of business related to online advertising revenue. According to consensus forecasts, the consolidated revenue of the corporation will show an increase of 19% YoY, to a new historical maximum of $33.4 billion. EPS on an annualized basis will not change much at the same time. Investors are also waiting for an increase in the active daily audience of FB by about 200 million users, up to 1.95 billion. According to FactSet, the upcoming options suggest volatility in the range of 3-4% of the current price. We will be waiting for Meta management's comments on the impact of changes to the privacy policy in the iOS operating system on advertising revenue. This will help you understand what quarterly results can be expected from the social networks Twitter (TWTR) and Snapchat ...

The governor of the Bank of England, Andrew Bailey, said that bitcoin is impractical as a means of payment. While cryptocurrencies are not being calculated massively. But today, large companies not only use blockchain, but also accept crypto as payment:Coca-Cola. In 2020, the corporation's Asia-Pacific division announced that it would allow customers in Australia and New Zealand to buy drinks with bitcoin and other coins. Payment is available through devices that accept digital payments.PayPal is the first payment system to add cryptocurrency for transactions. The company acts as an intermediary: the service will exchange cryptocurrency for ordinary dollars at the internal exchange rate, which already includes the cost of conversion.Visa and Mastercard, following PayPal, thought about the possibility of conducting transactions with cryptocurrencies. The systems focus on stablecoins, which have collateral in the form of real assets.Shopify is a platform for creating online stores. Thanks to the developers, the owners of these stores can accept cryptocurrency.Emirates. The airline from the UAE intends to accept bitcoins as payment. Moreover, Emirates will add its own NFT tokens to the site. This is not the first airline operating with cryptocurrencies. Latvian airBaltic has been selling tickets for the crypt for several years.Balenciaga, Gucci, Tag Heuer are also starting to accept cryptocurrency. Moreover, the new payment method will be available not only online, but also in regular stores using QR codes. And the first major retailer that started accepting the crypt was Overstock.Brazilian developer Gafisa announced that now an apartment can be bought for bitcoins. So the company wants to attract investors from other countries, and the cryptocurrency helps to transfer funds quickly and ...

Visa shares are trading 20% below the maximum level and near the marks of the beginning of 2021. Securities of this caliber are extremely difficult to catch at the "right" moment, since they are traded at inflated prices most of the time, but now they come with a pleasant discount.The correction is mainly observed due to the rotation of capital from growth stocks to value stocks, but there are other reasons. British Amazon will stop accepting Visa credit cards due to high costs. At the same time, the service will continue to accept debit cards. Apparently, this was done to send a signal to the European Union and encourage it to keep the commission's interchain at the current levels: 0.2% on debit and 0.3% on credit cards. The former EU member has the third largest online market, second only to the United States and China. Amazon's share of it exceeds 30%: in 2020, sales amounted to $26.5 billion, of which 60% came through Visa, but only 30% directly through the service's credit cards. At first glance, it sounds serious, but according to Morgan Stanley estimates, Amazon UK accounts for only about 0.10% of all Visa transactions, which means that the decision of the trading platform is unlikely to significantly affect the revenue of the payment giant.Visa's revenues are still increasing by 17-19%, while next year Wall Street expects a figure of 20%. This is more than enough to make the consensus forecast of analysts expecting V near $273 next year come ...

Amazon (AMZN) will soon stop accepting payments on Visa (V) credit cards issued in the UK.On this news, Visa shares fell by as much as 6% at the moment. Along with them, shares of other payment systems — Mastercard (MA) and PayPal (PYPL) - also went into the red zone.What happened and will the damage to Visa's business be great?Amazon has announced that it will stop accepting payments on Visa credit cards issued in the UK from January 19, 2022.The company is not satisfied with the fact that after the United Kingdom leaves the European Union, the British division of Visa increases its fees all the time. After all, now the restrictions for cards issued in the EU no longer apply to it.However, Amazon's sanctions will only affect Visa credit cards, and even then only issued in Britain. They will not affect debit cards of this payment system and cards issued in other countries, and even more so - cards of other payment systems.In fact, the news concerns only a very small part of Visa's business. Well, the drop in quotations of other payment systems in general was an emotional reaction to the news.And how are things really going with Visa?What is Visa's business situation?In the period from October 2020 to September 2021, the share of Europe in the total volume of payments and transfers by Visa cards was 19%. And the share of international payments and transfers by credit cards is 22%.Based on this, we can assume that the share of payments on European credit cards in the total volume of the payment system is quite small - about 4% (0.19 x 0.22 = 4.2%). And if we talk about the share of payments on British credit cards, it is even less. Therefore, investors should not worry too much: Amazon's decision will not have a significant impact on Visa's business.It is worth noting that this is not the first case of claims against Visa about the level of its commissions. Antitrust investigations have already been conducted against the company in the United States. The attention of regulators is constantly attracted by the dominant position of the company in the market, as well as its growing commissions, invisible to users.Another factor in the decline in Visa shares could be the decision of Warren Buffett's Berkshire Hathaway holding to sell 6.4 million of these securities. As a result, the company's share in the holding's portfolio decreased by 4.3%.Despite all this, Visa's business as a whole feels good and stable. The indicators are steadily increasing, except for the crisis year 2020. In recent years, revenue has been growing by an average of 10%, and net profit - by 15.5% per year.The company continues to grow due to an increase in the share of non-cash payments, primarily in developing countries. Also, the driver of growth may be the introduction of cryptocurrency payments into their systems, which Visa is already doing.Comparison with competitorsIn general, the business of all companies operating international payment systems is showing growth, although at different rates. These differences are reflected in their multipliers.In general, the main financial ratios of the entire sector look quite high. However, the PEG multiplier (P/E divided by the average EPS growth rate) for all of them is in the range from 1 to 3, which corresponds to a fair estimate. Only Mastercard is trading slightly more expensive than the sector, which is reflected in the consensus forecast of analysts about its shares.  Analysts' opinionThe ban of British Visa credit cards for purchases on Amazon resources will not have a serious impact on the performance of the payment system. Moreover, it will not affect other companies in the industry in any way.A temporary decline in stock prices is not a cause for concern. Rather, it is a good opportunity for a long-term investor to comfortably enter a fairly expensive but steadily growing ...