Is it safe to buy Visa stock as shares extend 5-month declines to over 20%?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 29, 2021
  • Visa stock on Monday edged slightly lower extending 5-month declines to over 20%.
  • Credit and financial services stocks have pulled back amid the Omicron variant fears.
  • Visa offers exciting growth prospects at reasonable valuation multiples.

On Cyber Monday, Visa Inc. (NYSE:V) shares edged slightly lower amid growing concerns about the Omicron variant. The stock is now down more than 20% over the last five months after losing more than 10% in market value in the last three weeks.

The company also issued an official complaint to the US government on Monday about India promoting rival RuPay. Local rival Mastercard Inc. (NYSE:MA) had also issued a private complaint to the US Trade Representative.

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The two companies think RuPay is infringing on a key market for their business, compounding the pressure brought by the new covid variant.

Is it too risky to buy Visa stock?

From a valuation perspective, Visa shares trade at reasonable valuation multiples of 39.68 P/E and 27.99 forward P/E making it an interesting choice for value investors.

In addition, analysts expect its earnings per share to grow by more than 15% this year, before rising at an annual rate of about 17.67% over the next five years.

Therefore, the stock could also gain the interest of long-term growth investors.

Source – TradingView

Technically, Visa shares seem to be trading within descending channel formation in the intraday chart. As a result, the stock has fallen closer to the oversold conditions of the 14-day RSI, creating an opportunity for a rebound.

Therefore, investors could target rebound profits at about $203.32, or higher at $209.29, while $192.77 and $186.13 are crucial support levels.

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