Visa stock price forecast as FQ4 results exceed Street expectations
- Visa shares on Wednesday plunged 5.6% after announcing its most recent quarterly results.
- The company reported its fiscal Q4 revenue and earnings Tuesday after markets closed, beating expectations.
- However, the company issued a disappointing FQ1 2022 revenue outlook, coming short of estimates.
On Wednesday, Visa Inc. (NYSE:V) shares plummeted more than 5% after announcing its most recent quarterly results. The company reported its fiscal fourth-quarter 2021, revenue and earnings Tuesday after markets closed, beating the consensus for Street expectations. However, Visa also issued an FQ1 2022 revenue guidance below estimates, resulting in a massive plunge in credit services stocks.
The company posted FQ4 non-GAAP earnings per share of $1.62, beating the average for analyst estimates of $1.54. In addition, its GAAP EPS of $1.65 outperformed expectations by $0.10, while revenue for the quarter increased by 28.6% from the same quarter in 2020 to $6.56 billion, $50 million ahead of estimates.
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Visa said it expected FQ1 2022 revenue to grow by 17%-19%, citing cross-border travel challenges as a major concern.
Visa vice Chairman and CFO Vasant Prabhu said:
Looking four quarters out projecting growth, revenue growth poses the greatest challenge, and is significantly dependent on the pace of the cross-border travel recovery.
Is Visa still overvalued?
From an investment perspective, Visa shares trade at a steep P/E ratio of 52.70, making the stock significantly overvalued.
As a result, value investors could opt for alternatives in the market. In Comparison, Mastercard Inc. (NYSE:MA) trades at a slightly attractive P/E ratio of 46.68.
Therefore, although the stock offers an exciting earnings growth outlook of about 19.28% per year over the next five years, investors may choose to monitor performances before betting on the growth.
Technically, Visa shares seem to have recently pulled back to trade closer to the oversold conditions of the 14-day RSI. However, given the company’s weak revenue guidance for FQ1, the bearish run could continue for the foreseeable future.
Therefore, investors could target extended declines at about $213.80, or lower at $207.88, while $225.22 and $230.85 are support levels.
Is it safe to buy Visa shares?
In summary, although Visa delivered better than expected fiscal Q4 results, its top-line guidance for FQ1 2022 limits the upside potential, thus pushing the stock price lower.