NEW YORK (MarketWatch) – After a stronger-than-expected fiscal fourth quarter, Visa Inc. is well-placed to benefit from an improved outlook for payment volumes even in the face of some notable headwinds, analysts at FBR & Co said Thursday.
FBR upgraded Visa to outperform from market perform, raised its earnings estimates for fiscal 2015, and raised its price target to $260 from $250, or 10% above its current trading level. Visa shares surged more than 9% in early afternoon trade, accounting for about 123 points of the Dow Jones Industrial Average’s 171-point gain.
“We believe Visa Inc. will benefit from the global secular shift in payment transactions from cash to electronic forms (plastic, e-commerce, mobile, etc.),” said analyst Scott Valentin. “Visa’s dominant share of global electronic payment volumes and transactions, we believe, places it among the leading partners of choice in the development of mobile and e-commerce payment systems, which should help drive double-digit revenue and earnings growth.”
MasterCard profit up 15% on higher payment volumes
MasterCard Inc. said its profit jumped 15% in the most recent period as the credit-card company posted higher revenue and payment volumes.
The results topped analysts’ expectations.
“We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment,” Chief Executive Ajay Banga said in a release.
MasterCard said its purchase volume rose 11% on a local currency basis to $843 billion. Cross-border volume rose 15%, while processed transactions jumped 10% to 11 billion. Gross dollar volume, meanwhile, surged 12% to $1.2 trillion, on a local currency basis.
The company reported a profit of $1.02 billion, or 87 cents a share, up from $879 million, or 73 cents a share, a year earlier.
Revenue rose 13% to $2.5 billion.
Analysts polled by Thomson Reuters had projected 78 cents a share in earnings and $2.45 billion in revenue.
MasterCard also said it was making progress in developing safer payment technology, a crucial topic as retailers have faced more attacks from hackers looking to steal customers’ financial information. MasterCard, along with rival Visa Inc. and others, has joined with with Apple Inc. on its Apple Pay mobile payments platform.
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