Book Profits on This NYSE-Listed Digital Payment Provider – V

Apr 13, 2022 12:00 AM PDT | Team Kalkine
Book Profits on This NYSE-Listed Digital Payment Provider – V


Visa Inc.

V Details

Visa Inc. (NYSE: V): Visa Inc. (Visa) is a payments technology company that provides digital payments across more than 200 countries and territories. The Company connects consumers, merchants, financial institutions, businesses, strategic partners and government entities to electronic payments.

Why Should Investor Exit?

  • Decline in Cash Position: The Company’s cash position as of December 31, 2021, was USD 14,720 million compared to USD 16,487 million as of September 30, 2021, implies a drop of 10.72%.
  • Leveraged Balance Sheet: Visa has a greater balance sheet risk with long-term debt of USD 17,673 million as of December 31, 2021. In addition, its long-term debt-to-total-capital ratio was 34.10%, compared to 24.2% industry median during the same period.
  • Intense Competition: The global payments industry is a very competitive one. New rivals or payment methods develop as technology advances, and old clients and competitors take on new tasks. The company's clients are raising expectations as the global payments market gets more complicated.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Source: Analysis by Kalkine Group

Stock Recommendation:

Visa's stock price has increased by 9.17% in the past month and is entering a range-bound zone, with the supports placed at the higher end of the range, currently trading close to the mid-point of its 52-week range of USD 252.67 to USD 186.67. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at ~43.31. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 171.73.

Considering the decline in cash position, high leverage, overvalued multiples, intense competition, and current valuation, we recommend a "Sell" rating on the stock at the closing price of USD 211.40 as of April 12, 2022.

1-Year Technical Price Chart (as of April 12, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.