Is Visa a bargain at prices below $200? Here is what you should do
Visa Inc. (NYSE:V) has been in the news with the suspension of Russian operations. This means that all Visa cards issued by Russian banks are now not functional. For the company, investors expected a significant hit on the revenues.
Analysis of the financials indicates that the Russian market contributes 4% to 5% of Visa’s revenues. The suspension of the operations should, therefore, not cause alarm to the markets.
Visa is a fundamentally endowed wide-moat company. It maintains a strong competitive edge in the global financial system. Visa has a large growth investment style. Despite the crisis in Ukraine, Visa is expected to record growth this year as global travel and business activities bounce back to the 2019 levels.
At a price of $198 when this analysis was prepared, Visa is a bargain. This perspective will emerge as the market gets to absorb information on how the suspension of services in Russia will impact the company. We think that the market overestimated the impact of suspending Russian operations leading Visa to trade below its intrinsic value.
Visa declined to $198.29Copy link to section
Technical analysis of the stock price shows low market confidence in the direction of the firm. The share has remained generally bearish since October 2021. A rebound that started in January this year was just interrupted by the war in Ukraine.
This week the share slipped below $200, with the lowest price being $186.67. The company is likely to find the next support at $175. However, the price does not accurately capture the performance prospects for Visa.
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SummaryCopy link to section
Visa is a fundamentally strong company with a large growth investment style. Despite the suspension of Russian operations, the company is expected to grow this year as global travel rebounds to 2019 levels. Visa is selling at highly discounted prices below the $200 level.