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October 15, 2024 — Visa Inc. (NYSE: V) has been lagging behind the broader Dow Jones Industrial Average this year, though the payments giant’s latest quarterly results suggest the gap may soon narrow. With a market cap of $680.9 billion, Visa processes digital transactions across more than 200 countries via its secure VisaNet network, offering credit, debit, prepaid, and digital payment solutions alongside risk management and data analytics tools.
The company’s stock has risen 8.8% year-to-date (YTD), trailing the Dow’s 11.4% gain. Over the past 52 weeks, Visa shares are up 9.1%, roughly half the Dow’s 17.4% return. However, in the past three months, Visa has outperformed the index, climbing 17.4% compared to the Dow’s 5.7% surge. The stock currently trades at around $381, about 1% below its 52-week high of $385.57, and has stayed above its 50-day moving average since late April and its 200-day moving average since July.
Q3 Earnings Beat Estimates
Visa’s fiscal third-quarter results, released on July 28, edged past Wall Street expectations. Adjusted EPS came in at $3.32, while net revenue rose 14% year-over-year to $11.63 billion. Strong consumer spending drove payment volumes up 10% to over $4 trillion, and processed transactions also grew 10%. Cross-border volume accelerated 13%, fueled by World Cup-related travel and spending. The performance was particularly notable given inflation headwinds and rising interest rates that have pressured consumer discretionary spending.
Why Visa Is Underperforming the Dow
Several factors explain the stock’s relative underperformance. First, Visa’s revenue growth, while solid, has been slower than that of some tech-heavy Dow components. Second, lingering regulatory concerns over interchange fees and potential antitrust actions in Europe and the U.S. have weighed on sentiment. Third, competitor Mastercard (MA) has gained only 4.3% YTD, suggesting the entire payments sector faces headwinds. Yet Visa’s stronger cross-border growth and wider merchant acceptance give it an edge.
Analysts Remain Bullish
Despite the lag, 40 analysts covering Visa assign a consensus rating of “Strong Buy,” with a mean price target of $418.72 — implying roughly 9.7% upside from current levels. Notable upgrades include a recent price target hike from Oppenheimer to $420, citing accelerating cross-border travel and B2B payment expansion. Morgan Stanley highlighted Visa’s investment in blockchain-based payment rails and its partnership with fintech startups as catalysts for long-term growth.
Exclusive Insights: What’s Next for Visa
Beyond the earnings beat, Visa is quietly expanding its value-added services. The company’s data analytics division now accounts for over 15% of total revenue, up from 10% three years ago, offering merchants personalized insights into consumer behavior. In addition, Visa’s push into real-time payments and tokenization is gaining traction: tokenized transactions grew 30% year-over-year in Q3. Meanwhile, the company is deepening its partnership with the International Olympic Committee through 2026, which could drive further cross-border volume during the next Games.
Comparison with Mastercard
Mastercard, Visa’s closest rival, has lagged even more — up just 4.3% YTD and barely positive over 52 weeks. Mastercard’s Q3 results showed slower payment volume growth (8% vs. Visa’s 10%) and a weaker cross-border volume increase (11% vs. 13%). However, Mastercard has a higher dividend yield (0.6% vs. Visa’s 0.5%) and a slightly lower valuation. Investors may prefer Visa given its stronger top-line momentum and broader global footprint.
Technical and Risk Considerations
Technically, Visa’s stock is trading near its 50-day moving average of $375, with support around $360. The relative strength index (RSI) is around 55, indicating neutral territory. Key risks include a potential slowdown in consumer spending due to economic uncertainty, regulatory changes in interchange fees, and currency fluctuations. However, Visa’s network effects and high switching costs provide a competitive moat.
Bottom Line
Visa stock may be underperforming the Dow this year, but its robust fundamentals, strong cross-border growth, and analyst optimism suggest the gap could close. With a Strong Buy consensus and a 10% upside target, the current dip may offer an entry point for long-term investors. As always, investors should consider their own risk tolerance and market conditions before making decisions.
Disclaimer: The information in this article is for informational purposes only and does not constitute investment advice. See Barchart Disclosure Policy for more details.
