The article was written by Jordan Klotnick, a Financial Analyst at I Know First. He graduated from the University of Monash with a Bachelor’s in Business- Majored in Marketing.

Visa Stock Price Prediction

Summary

Strong Start to Fiscal 2017: Positive First Quarter

Financial outlook for Full-Year 2017

Upcoming projects

Current forecast for Visa based on the algorithm

I Know First Algorithm Heatmap Explanation

Background

Visa Inc. (NYSE: V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. They operate one of the world’s most advanced processing networks – VisaNet – that is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead with prepaid or pay later with credit products. (Retrieved from Visa)

Strong Start to Fiscal 2017: Positive First Quarter

Visa (V) stock has shown strong potential over the past year, moving from $73.24 in March 2016, to today at $89.18. The first quarter of 2017 showed a net operating revenue of $4.5 billion, an increase of 25%. Largely driven by the inclusion of Europe and continued growth in processed transactions and nominal payments volume.

Source: Yahoo Finance

There are some contributing factors as to why Visa had such a good year. CEO Alfred F. Kelly, Jr said, “Visa’s fiscal 2017 is off to a terrific start with a strong first quarter of revenue and earnings growth driven by accelerating growth in payments volume, cross-border commerce and processed transactions in virtually all regions around the world. As we look ahead, we continue to see good momentum in the business driven by domestic and cross-border volumes, increasing consumer participation in electronic payments in developing markets, and the further acceleration of e-commerce in developed markets. We remain focused on the integration of Europe which is proceeding well.”

The first quarter of 2017 had service revenues at $1.9 billion, an increase of 17% over the year before. Recognized based on the payments volume in the prior quarter. Data processing revenues gained 28% to $1.9 billion, over the previous year. International transaction revenues grew by 44% to $1.5 billion from the previous year. Other revenues increased by 2% over the prior year to $203 million. Client incentives were $1 billion and represent 18.9% of gross revenues.

Source: Visa Inc

Visa repurchased 22.3 million shares of class A common stock during the three months ending December 31, 2016. At an average price of $79.77 per share, using $1.8 billion of cash on hand.

In early 2017, the board of directors declared a cash dividend of $0.165 per share, quarterly, payable on March 7, 2017, to all holders of record of the Company’s common and preferred stock as of February 17, 2017.

Financial outlook for Full-Year 2017

For the remainder of 2017, Visa looks to improve on the first quarter results. The company is looking to increase client incentives as a percent of gross revenues from 20.5% to 21.5%, have annual operating margin in the mid 60s and effective tax rate: low 30s. Visa’s annual net revenue growth will move from 16% to 18% on a nominal dollar basis.

Presently, the company’s focus is on increasing their presence of products and services to all possible point of transactions. The range of transactions being made is increasing from a previous system. Where customers pay merchants with either cash or credit cards to a new system that used a whole host of payment services. These services include: wallets, checkout gateways and services that handle payments in the background (Paypal, Stripe). Because of this, Visa has a huge opportunity to expand its revenue generation capacity.

Upcoming projects

Visa is looking to take part in various projects in the coming year. There are three that are the main focus in the article. The first being the Girl Starter Team Up to Empower Female-Led Startups, the second launching the ‘Everywhere Initiative’ in Europe, and finally mVisa to expand to 10 countries.

Conclusion

We are maintaining a bullish forecast of the stock. I Know First’s algorithm forecast the stock as a long-term investment.Visa looks to further expand their presence of products and services to all possible point of transactions. As well as this, look to bring the initiatives and projects mentioned above into fruition to further benefit their shares.

Current forecast for Visa based on the algorithm

Below is the latest forecast I Know First algorithm released on March 21, 2017. The I Know First Algorithm is bullish for all of the 1-month, 3 month and 1 year forecast for Visa.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.