Payment processing giant Visa Inc. V has launched a new product called Visa Tokenized Asset Platform (VTAP) that allows banks to issue and manage fiat-backed tokens (such as stablecoins) on blockchain networks. Introduced. This new platform is part of the company’s broader strategy to integrate traditional finance and blockchain technology. Banco Bilbao Vizcaya Argentaria, SA BBVA, a major bank, is already working with Visa to test the solution and plans to run a live pilot on the public Ethereum blockchain in 2025.
Why is this a big deal for Visa?
Essentially, Visa offers a way for financial institutions to bring real-world assets (such as fiat currencies) onto the blockchain, making transactions more programmable, secure, and interoperable. The move aims to link traditional currencies and digital assets and could transform the way banks process payments and new types of digital transactions.
VTAP will likely help Visa capitalize on the growing demand for digital assets and programmable money solutions. Visa can leverage its vast network of over 15,000 financial institutions and huge presence in over 200 countries and territories to introduce a new wave of blockchain-based products and services. This is expected to create new revenue streams and expand its influence in the financial sector.
By providing banks with an easy way to experiment with tokenized assets, Visa can strengthen relationships with traditional financial institutions while supporting the adoption of innovative digital solutions. This move strengthens the company’s leadership position in financial technology and allows it to remain competitive against other fintech and blockchain companies developing similar solutions.
V’s vision to support cross-chain interoperability and smart contract-based automation will enable broader adoption of tokenized real-world assets. This could open the door to use cases beyond payments. These efforts will enable Visa to capture opportunities in the rapidly evolving blockchain and digital asset ecosystem, strengthening its long-term growth prospects.
But there’s more to consider. Before deciding on the investment potential of a stock, it is important to evaluate Visa’s other growth drivers, fundamentals, and current market conditions.
What is a driving visa?
Visa is well-positioned to take advantage of increased cashless payment volumes due to increased digital adoption, despite pressure on lower-spending consumer segments. The company’s strong network, strong market presence and expanding partnerships support its ability to sustain growth, even if near-term fee income is impacted by lower discretionary spending. Visa’s focus on cybersecurity and fraud prevention strengthens its value proposition for both consumers and merchants, making it the preferred choice in the payments space.
Additionally, Visa’s consistent profitability, strong balance sheet and cash position enable it to deliver value to shareholders through significant share buybacks and dividends. Total debt is 34.2% of capital, which is lower than the industry average of 41.8%. In the third quarter alone, we generated $5.1 billion in net cash from operations. In the last reported quarter, Visa returned $5.83 billion to shareholders, but still had $18.9 billion left in its stock repurchase program.
Efforts to strengthen our presence in developing economies in the Asia and South America regions are expected to further increase volumes and contribute to a positive long-term earnings outlook.
Estimation and surprise history of V
The Zacks Consensus Estimate for Company V’s adjusted earnings for the current fiscal year is currently pegged at $9.92 per share, suggesting year-over-year growth of 13.1%. The consensus mark for next year suggests an additional 11.7% upside. Consensus estimates for fiscal 2024 and fiscal 2025 revenue are for year-over-year growth of 9.6% and 9.8%, respectively. The company has topped earnings estimates in each of the past four quarters, with the average estimate coming in at 2.9%. This is shown in the diagram below.
Visa Inc. Stock Price and EPS Surprise
Visa Inc. price-eps-surprise |Visa Inc. quote
Visa price performance and ratings
Late last month, Visa’s stock price fell after the Department of Justice (DOJ) filed an antitrust lawsuit accusing the company of illegally controlling the debit card market. But analysts say the drop in stock prices has created a solid entry point for potential investors. The price revision has made Visa even more attractive.
The company’s stock has fallen 0.6% in the past month compared to the industry’s growth of 1.1% and the S&P 500’s return of 3.9%.
1 month price performance of V
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Image source: Zacks Investment Research
From a valuation perspective, Visa currently looks expensive, with the stock trading at a trailing 12-month price-to-earnings ratio of 27.87x, compared to the Zacks industry average of 21.63x. However, this premium valuation reflects the market’s strong confidence in the company’s future prospects.
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Image source: Zacks Investment Research
By comparison, peer Mastercard Incorporated MA is more expensive at 30.91x.
Visa Stock: Buy for Growth
Considering the positive factors discussed, Visa is definitely a stock to add to your investment portfolio. The recent decline in the stock price has created an attractive entry point for investors. It is currently below the Zacks average price target of $308.24 per share.
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Image source: Zacks Investment Research
The company still has significant growth potential due to blockchain technology and the benefits of expansion into developing economies and consequent diversification, which helps justify its higher valuation. Masu. So investors may benefit from efforts to increase shareholder value and consider holding on and buying more shares.
Visa currently has a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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