Will This Coverage Initiation Help Visa (V) Stock Today?

NEW YORK (TheStreet) -- Visa Inc. (V) shares had coverage initiated with an "outperform" rating by analysts at Pacific Crest on Tuesday.

The firm set a $241 price target on the shares.

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Visa is up 1.7% to $204.53 in trading today.

The firm sees the credit services company as being at the forefront of the mobile and electronic payment sector due to diversified investments and partnerships across the retail market.

"We are confident that in Visa's innovation portfolio spanning products, security, partnerships (e.g., Gap), and acquisitions will ultimately help expand digital penetration," the firm said.

"Unmatched scale ($25 trillion of payments and a $20 billion in investments over the past five years), a trusted brand (the most trusted online payments provider in our survey), and a broad tech portfolio place Visa in an elite position to enable the convergence of mobility and data-driven services across an omni-channel environment," analysts concluded.

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Separately, TheStreet Ratings team rates VISA INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate VISA INC (V) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 20.1%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • V has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, V has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VISA INC has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VISA INC increased its bottom line by earning $7.58 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($8.88 versus $7.58).
  • The gross profit margin for VISA INC is rather high; currently it is at 69.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.59% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 154.56% to $1,541.00 million when compared to the same quarter last year. In addition, VISA INC has also vastly surpassed the industry average cash flow growth rate of 15.13%.
  • You can view the full analysis from the report here: V Ratings Report
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