Several brokerages lowered their price targets for Visa’s stock in response to the company’s disappointing third-quarter revenue, which fuelled worries about the company’s customer spending growth slowing and potentially harming the United States payments industry.
The findings highlight the difficulties the sector is facing following several quarters of expansion as a significant portion of consumers reduce their spending due to inflation and expensive borrowing, while wage growth slows down.
Additionally, Visa reported a decline in its United States payment volumes during the first three weeks of July 2024, attributing the decline to a variety of factors, including the recent CrowdStrike-related outage.
Visa’s stock dropped 3.4% to USD 255.75 in premarket trading, erasing any small gain the company has made so far this year, that is, if current levels hold. At least nine well-known Wall Street brokerages cut their price targets for the stock.
“We don’t expect a positive change in narrative. The current (valuation) multiple will prove a good entry point, but (we) struggle to see a near-term catalyst. We would not be surprised to see shares more range-bound over the next few months until there is greater clarity on the FY25 guide,” Jefferies analyst Raymond James wrote, as reported by the Zawya.
In the meantime, shares of rival Mastercard fell 1.5%, and those of PayPal Holdings and Block fell 0.5% and 0.8%, respectively.
Visa added that the Asia-Pacific region’s payment volumes have decreased as a result of the economic climate, particularly in China. The economy of the nation has been harmed by a protracted real estate crisis and low business sentiment.
In the meantime, pressure on lower-income households was also mentioned in the most recent quarterly results of other major American corporations, including Coca-Cola, PepsiCo, and Domino’s Pizza.
“We’re seeing much more price sensitivity and consumers looking for more value,” PepsiCo CEO Ramon Laguarta said earlier in July 2024.