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Visa stock price forecast as FQ4 results exceed Street expectations

By:
on Oct 27, 2021
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  • 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.

Source – TradingView

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.