Piper Sandler’s Johnson explains why Visa stock ‘stands out to me’

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 1, 2021
  • Craig Johnson says the pullback in Visa stock is a good buying opportunity.
  • The easing COVID-19 restrictions will also help drive growth for Visa Inc.
  • Visa shares are currently about 5% up year to date in the stock market.

The Dow Jones Industrial Average concluded last month with a close to 2% gain, despite several of its notable companies struggling to turn green.  Among the bottom performers in May were the giants like McDonald’s, Verizon, Disney, Apple and Visa Inc (NYSE: V).

Craig Johnson’s remarks on CNBC’s “Trading Nation”

On Tuesday, Piper Sandler’s chief market technician, Craig Johnson, however, expressed confidence on CNBC’s “Trading Nation” that a few of these companies are likely to significantly recover in June. Johnson said:

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“Visa stands out to me. Here’s a stock that has had obviously a tough May. It’s corrected right back to the long-term uptrend support line looking back to March of 2020. And from our perspective, we think that these pullbacks should be bought.”

Visa shares ended May with a 3% decline. Compared to its peak seen in April, it is now about 4% down. The stock, however, is 4% up on a year-to-date basis. In separate news from the United States, Cowen upgraded Boeing to ‘outperform’ on Tuesday as air traffic continued to improve in recent weeks.

Fundamentals are also in Visa’s favour

Johnson further highlighted that COVID-19 restrictions are starting to ease worldwide. Therefore, a solid case can be made that transactions will increase in the upcoming months, driving growth for companies like Visa Inc.

“We’d seen some commentary that two-thirds of the people right now are spending the same amount or more than they were spending in 2019, so that should be a good setup. We think upside from here on the shares will be up to about $285 (£201), so about 25% upside from here so we’d be a buyer of Visa heading into June,” he added.

At the time of writing, Visa shares are exchanging hands at $227. The stock opened roughly 1% up on Tuesday but lost the entire intraday gain in the next hour. In comparison, the San Francisco-based company had started the year at $217.76 per share.

Earlier this year in January, the American multinational financial services company said its net income declined on a year over year basis in the fiscal first quarter (Q1). Visa performed fairly upbeat in the stock market last year with an annual gain of more than 15%. At the time of writing, it has a market cap of $484 billion and a price to earnings ratio of 54.28.

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