SAN FRANCISCO (
shares hit a new 52-week-low on Thursday on strong trading volume, amid investor concern that the big electronic payments network will have to retool its business to account for the changing debit card rules in the U.S.
Visa shares were most recently falling 3.3% to $66.27, with roughly 8.2 million shares already changing hands on Thursday - above its three month trading average of 6.3 million shares a day. The stock ranged from as high as $68.97 and as low as $66.07 on Thursday, according to Yahoo! Finance. But as the day proceeded, shares continued toward the lower end of that range.
continued from Wednesday when Bank of America Merrill Lynch analyst James Kissane slapped a sell-equivalent rating on Visa. He downgraded Visa from neutral to underperform and slashed his 12-month share price target on Visa by $11 to $70.
The analyst is one of the only bearish views toward the electronic payments network's long-term outlook. According to
, 33 analysts have either buy or strong buy-equivalent ratings on the firm; three others have hold ratings; and zero analysts have sell ratings on the firm. Bank of America Merrill Lynch's rating change was not a part of the
Kissane is "skeptical" on both large so-called "open loop" payment firms, i.e. MasterCard and Visa as opposed to
Discover Financial Services
. Kissane also rates MasterCard at underperform.
"Our previous neutral rating on
Visa relative to underperform on
Visa's stronger relative position in debit as well as its covered liability plan with its U.S. bank owners," according to a research note to clients on Wednesday. "Given debit regulation issues and growing structural concerns (potentially exacerbated by regulation), we now think that
Visa may have at least as much downside risk as
Shares of Visa and MasterCard have come under significant pressure following the passing of the Durbin amendment in May, which places restrictions on
There is growing risk of a discontinuity in the growth and margin profile of the networks," the note said. For Visa's fiscal 2011 year, "we forecast that Visa will generate 58.8% operating margin. With less pricing power, more pushback from large customers and potential disintermediation, we believe margins will plateau over the next couple of years and then likely decline."
Wells Fargo Securities analyst Timothy Willi trimmed earnings estimates for Visa and MasterCard on Wednesday following more conservative estimates on debit payments volume given a slower personal consumption expenditure environment, he wrote in a note to clients.
Still, the analyst continues to rate both firms at outperform "as concerns about the consumer/Durbin fallout are priced in/overly discounted and valuations remain attractive," he wrote.
MasterCard shares also hit a new 52-week-low on Thursday of $192.76. The Purchase, N.Y.-based payments firm has seen its stock drop 28% since January 19, when it hit a 52-week-high price of $269.88. Shares were down 0.5% at $193.45 around 1:30 pm ET.
American Express shares were rising 1% to $40.47. Discover Financial shares were flat at $15.66.
--Written by Laurie Kulikowski in New York.
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