The shares of Visa Inc (NYSE:V) declined after analysts at Sterne Agee lowered their fourth-quarter EPS and revenue estimates for the company to reflect the recent appreciation of the U.S. dollar and new product introductions.
The stock price of Visa Inc (NYSE:V) dropped more than 2% to $198.10 per share at the time of this writing around 12:54 in the afternoon in New York.
Stronger dollar pressured Visa Inc payment volume growth
In a note to investors, Sterne Agee analysts Thomas McCrohan and Leonard DeProspo emphasized that the payment volume growth of Visa Inc was pressured by a stronger U.S. dollar.
According to the analysts, the pressure on the payment volume growth of the company is expected to continue until next year. They estimated a 2% headwind to the volumes and revenue of Visa Inc (NYSE:V) if the current level of the dollar persists.
“A stronger U.S. dollar has impacted year-to-date payment volume growth (fiscal 2014) by 2.4%. Assuming the U.S. dollar remains at current levels or strengthens a bit more, we anticipate an equal headwind for fiscal 2015. As a consequence, we are lowering our 2015 estimates to reflect currency,” according to McCrohan and DeProspo.
Analysts’ estimates for Visa Inc
For the fourth quarter, McCrohan and DeProspo estimated that Visa Inc (NYSE:V) would be able to deliver revenue of $3.260 billion, an increase of 9.6%. Its EPS expected to be around $2.11, up by 11.7%.
For the fiscal 2015, Visa Inc (NYSEV) is expected to achieve $14.016 billion in revenue and $10.45 in earnings per share.
The company is expected to generate $15.607 billion in revenue and $12.02 in earnings per share for the fiscal 2016.
McCrohan and DeProspo explained that their revised estimated reflect increased conservatism on the company’s 4Q margins given the recent product introductions such as tokenization, Visa Checkout and ApplePay.
Visa Inc expected to meet is 2014 guidance
The analysts forecasted that Visa Inc (NYSE:V) would be able to meet its fiscal 2014 guidance. The management of the company reduced its revenue guidance to a 9% to 10% growth from low double-digits last quarter. The reduction was due to unfavorable foreign exchange and weakness in cross-border transactions as well as currency volatility at a 15-year low.
McCrohan and DeProspo maintained their Buy rating for the shares of Visa Inc (NYSE:V) with a price target of $265 per share. According to them, the current price levels of the stock is attractive.