Visa Q1 preview: Where next for Visa stock?

When will Visa release Q1 earnings?

Visa will report fourth quarter and full year earnings on Thursday January 27.

Visa Q1 earnings preview

Visa is expected to deliver its seventh consecutive quarter of topline growth when it reports results this week as the payments giant continues to benefit as the global economy reopens and recovers from the pandemic, with global payments volume surging to a new record high of $2.8 trillion in the last quarter.

Visa’s chief financial officer Vasant Prabhu said in October that the business had seen a recovery in consumer spending over the last three to four quarters, but that the business was ‘not back to normal yet globally’ – adding that the easing of restrictions in Asia was a ‘key variable’ for domestic and cross-border spending (representing spending on cards in other countries from where it was issued) going forward. Visa said cross-border volumes excluding inside Europe were still at just 85% of pre-pandemic levels in the last quarter. That was in stark contrast to rival Mastercard, which saw cross-border spending return to pre-pandemic levels in the same period.

Analysts currently expect cross-border transactions to grow 26.5% in the first quarter. Total worldwide payments volume is expected to grow 15.2%, and total processed transactions are forecast to climb 19.3%. Visa will outline these growth figures as key business drivers when it releases results.

Domestic spending in the US, which accounts for almost half of Visa’s payment volumes, should fare better as that has already returned to above pre-pandemic levels. Spend Trend data, which tracks card purchases in the US, points toward a 23% year-on-year rise in the quarter. The big uncertainty here is that government stimulus, which has fuelled consumer spending throughout the pandemic, unwinds this year and hits the public’s wallets. Meanwhile, higher interest rates in 2022 means credit will become more expensive. Combined, this could create a potential storm for the spending outlook for Americans this year.

Visa has said revenue will grow in the high teens in the first quarter of the new financial year and Wall Street thinks it can hit the upper-end of that range with estimates the topline will grow over 19% to $6.8 billion from $5.7 billion the year before, while adjusted EPS is seen rising almost 20% to $1.70 from $1.42.

Where next for Visa stock?

Visa shares have declined almost 9% since the start of 2022, underperforming its main rival Mastercard, and are now trading at a level last seen in early December.  

The stock gapped lower yesterday and this should close over the coming days or possibly even weeks, supported by the hammer candlestick we saw yesterday as buyers rushed in after sellers managed to push shares to their lowest level in over seven weeks. The stock is targeting $206 to close the gap before it can start to target the short-term sma at $210, then the medium-term sma at $217 before it can eye the 2022-high of $227, which is in-line with the long-term sma.  

On the flip side, we may see Visa shares lose further ground adhering to bearish signals. The fact the 50-day sma trades below the 100-day sma, which in turn is below the 200-day sma, provides a strong bearish indicator that is supported by the RSI. The 13-month low of $190 hit at the start of December should provide a floor for the stock but any move beyond there opens the door to the $179 level of resistance seen back in October 2020.  

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