Visa's Q1: Morgan Stanley, RBC Both Bullish

Visa Inc V reported first-quarter results Thursday that one analyst described as "unremarkable" and said could be overshadowing the bigger picture.

The Visa Analysts

Morgan Stanley analyst James Faucette maintained an Overweight rating on Visa with an unchanged $240 price target.

RBC Capital Markets analyst Daniel Perlin maintained at Outperform with an unchanged $251 price target.

TD Ameritrade's Kinahan: Visa's Quarterly Print 'Wasn't Enough'

TD Ameritrade Holding Corp. AMTD Chief Market Strategist JJ Kinahan told Benzinga that Visa showed record-high revenue and met expectations in the quarter, which is "awesome." Yet he said Visa also showed record expenses to match expectations.

Stocks that tend to move higher ahead of earnings are met with huge expectations and in Visa's case, it "just wasn't enough," he said.

Morgan Stanley: Visa Grinding Higher Over The Years

Visa's "unremarkable" revenue and EPS headline numbers in the first quarter were negatively impacted by unusual foreign exchange moves and the timing of certain world events like Brexit and fires in Australia, Faucette said in a Friday note.

In fact, investors shouldn't "lose sight" that EPS is modeled to grow 12.5% in fiscal 2020, the analyst said. It is expected to accelerate to a 17% compounded annual growth rate through 2022, he said.

Momentum will come from  acquisitions, opportunities to renew partnerships agreements and the ability to expand services to its partners, Faucette said.

Finally, Visa's venture capital investments over the past few years are now starting to show benefits through new capabilities and technologies, according to Morgan Stanley.

RBC's Key Visa Takeaways

Visa reported "solid" earnings despite a slowdown in revenue growth from 13% last quarter to 10%, Perlin said in a Thursday note.

The analyst had several encouraging takeaways from the report:

• The accelerated pace of client renewal rates.
• Visa Direct transactions rose above 700 million and will continue serving as the "gift that keeps on giving."
• Visa is well-positioned to take advantage of the growing opportunity in Africa. Management reaffirmed its 2020 outlook for mid-teens EPS growth and low double-digit net revenue growth.

Visa Price Action

Visa shares were down 3.18% at $201.50 at the time of publication Friday.

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