Visa Inc (NYSE:V) will release the results from its June quarter today after closing bell, and analysts are releasing updated preview reports on the company. William Blair analysts Robert Napoli, Christopher Kennedy and Brian Hogan reiterated their Outperform rating on Visa and also its top rival Mastercard Inc (NYSE:MA), which reports next week.
Visa probably won’t surprise
The analysts have kept their estimates for Visa Inc (NYSE:V) the same and say they’re roughly in line with Wall Street expectations. Last month the company released its intra-quarter volume trends, which held steady in April and May. The analysts are expecting to see purchase volume growth of 12 percent at Visa, compared to the 7 percent growth the company posted for the March quarter.
The analysts believe Visa will outperform MasterCard slightly and note that the company’s share of credit card offers in the U.S. has increased in recent quarters. They said this could provide some explanation for why Visa Inc (NYSE:V) is growing more quickly than Mastercard Inc (NYSE:MA).
They believe Visa’s adjusted earnings per share will grow 13 percent to $1.77 per share, which is slightly below Wall Street’s consensus of $1.80 per share. For the full calendar year, they’re expecting to see 17 percent earnings per share growth at Visa.
Visa could settle this summer
The analysts said they’re looking forward to hearing an update on the lawsuit filed by merchants in connection with the company’s fees. They believe a settlement will be reached late this summer. They refer to reports suggesting that “several prominent merchants” have opted out of the proposed settlement. However, it still isn’t clear if the 25 percent threshold which will let Visa cancel the deal.
What will Visa say about regulatory changes?
And finally, the analysts said they want to hear what Visa Inc (NYSE:V)’s management has to say about the proposed regulatory changes in Europe. One involves a proposal to cap interchange fees and also prevent issuers of credit cards from processing transactions.
The final proposal is expected to be released today, but at the time of the analysts’ report, they had viewed the draft. It indicated that debit card fees in the European Union would be slashed from €4.8 billion to €2.8 billion, representing a 48 percent cut. It also showed that credit card fees would be cut 39 percent from €5.7 billion to €3.5 billion.
