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Visa’s disappointing third-quarter revenue has led several brokerages to lower their price targets on the stock, raising concerns about decelerating consumer spending and its implications for the U.S. payments sector.
Image Source: The Hill
The financial results highlight ongoing industry challenges after periods of growth, exacerbated by inflation and high borrowing costs which have compelled many consumers to reduce their spending.
During the first three weeks of July, Visa reported a decline in U.S. payments volumes, attributing it to several factors including last week’s CrowdStrike-related outage. The company’s shares dropped nearly 4% to USD 254.13, erasing gains made earlier this year, with at least nine major Wall Street brokerages revising their price targets downward.
“We don’t expect a positive change in narrative,” analysts at Jefferies commented. “The current (valuation) multiple will prove a good entry point, but (we) struggle to see a near-term catalyst.”
Image Source: Reuters
Image Source: Reuters
Raymond James analysts also expressed caution, stating, “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.”
Other payment giants like Mastercard, PayPal Holdings, and Block also saw declines in their share prices, down 2.5%, 1%, and 2.6% respectively. Visa noted that payment volumes in the Asia Pacific region, particularly in China, have slowed due to challenging economic conditions driven by a prolonged property crisis and weak business sentiment.
This trend is echoed by other major U.S. companies such as Coca-Cola, PepsiCo, and Domino’s Pizza, which also reported pressures on lower-income consumers in their latest quarterly earnings. Earlier this month, PepsiCo CEO Ramon Laguarta highlighted increasing price sensitivity among consumers, stating, “We’re seeing much more price sensitivity and consumers looking for more value.”
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