Visa (V) shares surged in Wednesday after the credit card issuer posted much stronger-than-expected first quarter earnings amid a consumer spending rebound powered in part by business and personal travel following a "short-lived" jump in Omicron infections.
Dow component Visa earned $1.79 per share over the three months ending in March, well ahead of the Street consensus forecast, as group revenues jumped 25% to $7.2 billion. Cross border spending was up 38%, Visa said, and its suspension of payments in Russia only affected around 4% of its revenues and resulted in a modest $60 million charge.
Looking into the current financial year, Visa said it sees 'high teens' percentage growth in revenues, with cross-border travel rising above to pre-pandemic levels recorded in 2019.
Earlier this month, American Express (AXP) also smashed Street forecasts with revenue growth of nearly 30%, to $11.74 billion, and a bottom line of $2.73 per share as travel and entertainment budgets swelled.
"In terms of the big picture, after the short four to five-week impact of Omicron in December and January in the United States and many other parts of the world, the recovery continues to be robust," CEO Al Kelly told investors on a conference call late Tuesday. "At this stage, in terms of volumes, we have seen no noticeable impact due to inflation, supply chain issues or the war in Ukraine."
"I think the pandemic itself has accelerated people's usage of card-not-present in e-commerce, and I think that's a sustaining model that's going to help drive growth on a going-forward basis as well," he added. "So I think we're going to see ourselves taking advantage of that."
Visa shares were marked 8% higher in early Wednesday trading to change hands at $217.20 each, a move that would nudge the stock into positive territory for the year.
"We think over the coming quarters investors will witness the unique diversity of V's business model that as a whole can show growth regardless where spend is: debit/credit, instore/online, services/retail sales, or domestic/international," said Oppenheimer analyst Dominick Gabriele, who carries and 'outperform' rating with a $262 price target on the stock.
"This diversity along with strategic initiatives sustaining high revenue growth and thus margin expansion will likely gain investor attention in an uncertain economic environment," he added.
