SunTrust is out with a pretty major call on Visa (V), reiterating its Buy rating and raising fiscal 2008, 2009 and 2010 EPS estimates and price target. The Firm's target is $100, and new fiscal 2008, 2009 and 2010 EPS estimates are $2.11, $2.96 and $3.82, respectively. These compare with prior 2008, 2009 and 2010 EPS estimates of $2.04, $2.69 and $3.55. These sharply higher estimates reflect firm's confidence in Visa's volume growth, pricing power and operating leverage.
The Firm argues that Visa and MasterCard (MA) are the premier payments companies in their universe. These companies boast the most compelling franchises and exposure to the strongest global secular growth drivers. As a result, they should continue meaningfully outperforming Street mean revenue and EPS expectations. While they appear richly valued, they believe this is more a function of unrealistically low analyst estimates, rather than intrinsically rich multiples. The Firm can support Buy ratings on each as their models make an effort to depict actual earnings power, rather than artificially conservative estimates.
SunTrust's significant fiscal 2009 and 2010 financial projection increases reflect modestly more aggressive volume and transaction growth in fiscal 2009, along with a more bullish view of the company's pricing power.
It is the Firm's view that most analysts have been unwilling to boost their growth forecasts for Visa as the company gave markedly conservative guidance during the IPO process and did not alter its long-term growth objectives following impressive 2Q08 outperformance. Furthermore, while MasterCard has been public for two years, and has consistently posted organic revenue and earnings growth well ahead of its long-term goals, Visa has only beaten expectations for one quarter.
As a result, SunTrust believe analysts' MasterCard estimates are closer to reality than their Visa projections. This has created a situation in which V appears to have a valuation comparable with MA on EBITDA and higher on EPS. The Firm believes the opposite is actually true, however.
Notablecalls: I think this is a pretty major call from SunTrust. I don't know how many of you remember but SunTrust was out on MasterCard on June 15, 2007 with a hefty EPS raise (one that pretty much triggered another round of EPS raises by other firms).
Same thing may be happening with Visa here. Note that SunTrust's EPS estimates for 2009-2010 are the new Street high.
Technically, the stock looks ready for a nice bounce.
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This article has 93 comments:
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Zack
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22 Comments
My Website
May 27 09:54 AM-
Jake Blues
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38 Comments
May 27 11:17 AM-
Jake Blues
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38 Comments
May 27 11:18 AM-
Cat~eyes
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42 Comments
My Website
May 27 01:02 PM-
Cat~eyes
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42 Comments
My Website
May 27 01:04 PM-
greencapitalist
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111 Comments
May 27 01:41 PMma is having europe close to 50% and expected to grow to 60% of market share. v is out of europe and just gets royalties.
v's earnings is 1.45 billion this qtr and 1.2 billion was ma's.
if v is leader in america, then ma in europe. so this kind of balances out and so only we have almost equal earnings.
in international space, the fight is still on. there is no need to assume v will take international (especially china, india, brazil, south africa) since ma is proving tough and in fact specializing in international territory.
if v is being valued at 100 now by suntrust, it is almost a whopping 50 times valuation currently and 36 times for 2009 and greater than 30 times for 2010. very very pricey valuation.
at the same range, then ma also should be valued at these levels. but it is not. it is trading at many multiples lower than above number.
if you think v is at a good price now at 76 then ma is dead cheap.
i think in valuation terms it is better chasing the cheaper ma rather than v.
i think v has support at 75 and i have averaged in. but my next average down will be 72 or 70 because even then i guess ma is cheaper than v.
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Shane
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10 Comments
My Website
May 27 03:11 PMWhat I really want to see though, is how their mobile payments platform pans out a couple quarters from now. If they start getting major carriers on board pushing the buzz, V will go stratospheric.
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fencer1
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11 Comments
May 27 03:22 PMHow you doing? Whatcha think about the other site? I'm bummin...
Fencer1
On May 27 01:04 PM Cat~eyes wrote:
> Jake, you're right though. International transactions (or cross-border
> transactions) currently account for 40% of all Visa transactions.
> The other 60% originate in the U.S. CEO Joe Saunders predicted that
> the number would be about 50/50 in the next 12-24 months, so you
> can imagine how quickly and how big the international growth is going
> to be!
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Frankmeister
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14 Comments
May 27 04:30 PMLet me clarify it for you: 1. You're an idiot. PE ratios are not the only factor to consider when buying stocks. 2. Everything you said about MA vs V is inaccurate. 3. You are obviously shorting Visa and you lost money today!
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Frankmeister
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14 Comments
May 27 04:39 PMVisa today- up 3.13% with a bump UP in after hours. Mastercard- up 2.03% with a TWO DOLLAR DROP after hours. Currently, Visa earned 3 TIMES what Mastercard did today. Mastercard gave back half of what it made today in after hours. I suspect people are switching from MA to Visa but you figure it out.
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Shane
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10 Comments
My Website
May 27 04:49 PM-
Lee N.
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12 Comments
May 27 04:56 PM-
Saurischian
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11 Comments
May 27 05:33 PM//////////////////////...
Watch for those "other firms" to raise expectations on V in the next two weeks.
64 days until V announces second quarter results (July 30)!
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Adesai
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91 Comments
May 27 05:56 PMFrom the conference call from Saunders (CEO of Visa) he claimed that V europe shares will be bought out by V inc in october. After which V inc will convert Class C shares to Class B shares at a 1 to .77 ratio (i believe that is the correct ratio), which willl effectively decrease the total # of outstanding shares. These 2 events will effectively increase the value and EPS for each individual Visa shares.
Many analyst have given projected price for Visa from $75-100. I think this huge range is due to incomplete facts of the guidance of this company. I believe the projected price of $100 is conservative b/c of the 2 events mentioned above. If the 2 events (buying V europe and conversion of class c to b shares at 1 to.77 ratio) were NOT to happen then i believe this is highly overvalued stock compared to MA.
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Adesai
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91 Comments
May 27 06:00 PM-
Adesai
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91 Comments
May 27 06:02 PM-
VDiddy
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10 Comments
May 27 06:26 PMAnyways, I like what's going to happen this winter with the share buy back and Visa Europe as this will raise the value of Visa. Secondly, many people don't realize that Visa is the only card that is being used in developing foreign countries and those one's that do take both Visa and Mastercard, Visa has 2 to 1 and sometimes 3 to 1 advantage. Thirdly, Visa's CEO is truly being conservative. Fourthly, MA will get the crap sued out of them because with AXP stock tanking they are going after MA for lots of money that they haven't set aside and since Visa has already settled with AXP and set aside extra money Visa is in good shape. Lastly, instutions are increasing their holdings in Visa and Visa also mentioned about buying back more class A shares next year.
I love my Visa..
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peterswine
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3 Comments
May 27 06:58 PMNot to mention Visa solid profit margin of about 21% in the most recent quarter, above the industry average. In addition, the upcomming olympics along with growth potential in Asia (china and india) with major internatinal banks investing millions in Visa, the growth potential is huge and will surpass MA in the long run. Remember Visa, still has un-tapped business opportunities in the international market space, this will be a tough one for it's rival Mastercard, not to mention it's reached it's TOP $$.
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peterswine
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3 Comments
May 27 07:02 PMOn May 27 01:04 PM Cat~eyes wrote:
> Jake, you're right though. International transactions (or cross-border
> transactions) currently account for 40% of all Visa transactions.
> The other 60% originate in the U.S. CEO Joe Saunders predicted that
> the number would be about 50/50 in the next 12-24 months, so you
> can imagine how quickly and how big the international growth is going
> to be!
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Greed/Fear
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1 Comment
May 27 07:30 PM-
greencapitalist
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111 Comments
May 27 08:25 PMha ha...are you the alias of the guy who has been pumping v relentlessly and now threatening people....
adesai, can you post the link or post the relevant portion. i dont think v can buy v europe. the basic condition in which eu approved v going public because was to spin off v.
well ma has several analysts coming lately and telling it is from 340 and above - www.newratings.com/en/...
and many analysts have rimm beyond 160 and even 180 and 200...
no way ma and rimm trading at these levels..
and by the way a.h has no meaning, with 1000 shares i can thrash ma down 10 points or pump v by 5 points.
you should not go by day to day trade and tell that today v is up. so it is better.
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greencapitalist
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111 Comments
May 27 08:30 PMgood point. that's why i am telling there are many points and ma is beating them to pulp. some of them are,
* ramping up margins
* chewing up earnings qtr after qtr (not 5 cents kind of beat but moster beats like 20 to 59 cents)
* a proven management and not wamu management
* moving towards new plastic market like europe big time (ma has nearly 50% europe market)
* catching new markets like dubai, middle east, singapore, india.
* ramping up on china
* increasing guidance and not giving conservative guidance (watch for ma 29th call)
* p/e ratio that looks attractive all the time and not in bubble territory like 40 or 45.
* new technologies like pay wave, mobile payments - www.newswire.ca/en/rel...
look guys, i own v too. but not chasing it. as an investor we need to e neutral and not pump stocks just because we own them.
all i am telling is that if market is not valuing ma at v levels, then v has no business to be pumped up or valued in bubble.
i repeat again, at this v level of close to 40 p/e, either ma is DEAD CHEAP or v is in BUBBLE.
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greencapitalist
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111 Comments
May 27 08:45 PMhello adesai, with respectful disagreement, i think the price you are quoting is astronomical.
the basic thing is that one should not buy a stock saying the company will buy back the stock.
ma has been buying back stock for a long time. but that will not be a reason for me to buy. ma can announce a split on 29th or buy back even more. but that should not be my guiding decision.
since we are in america, where v is the undisputed leader, we think v rules the world. without v europe, v is as equal to ma.
eu due to stringent anti competitive rules, will not allow v europe just like that to be merged with v. of course, if they merge, then v will shoot up. but that should not be my guiding decision. we look at fundamentals and not hypothetical scenario's.
it is like telling goog will buy rimm because their android is full of bugs and hence rimm will go 300 bucks!!!
that's my 2 cents.
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Cat~eyes
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42 Comments
My Website
May 27 09:27 PMHowever... GREAT NEWS! There is a new site, same format, same great philosophy.. and it's at visaglobalwinners.blog.../
So come on over and please spread the word to those Visa share-owners that want a drama-free zone to learn, share information, and state their opinions in a great place!! So come on over!
Let's get this wonderful site up and running to its full glory as it was before!! I look forward to seeing you all over there!!
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investmentAction
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9 Comments
My Website
May 27 09:57 PM-
fencer1
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11 Comments
May 27 10:27 PMGood to hear from you. How you doing?
I've been trying to get into the new site. Any suggestions?
Thx.
fencer1
On May 27 09:27 PM Cat~eyes wrote:
> Adesai and Fencer1: There's a lot of reasons but the upshot is that
> the guy who only set up the site from a computer standpoint shut
> it down over a simple dispute without notifying anyone first. He
> then posted the resulting emails after V Winner found out that his
> site had been destroyed and that hundreds of hours of work had been
> destroyed. He was obviously upset.
>
> However... GREAT NEWS! There is a new site, same format, same great
> philosophy.. and it's at visaglobalwinners.blog.../
>
>
> So come on over and please spread the word to those Visa share-owners
> that want a drama-free zone to learn, share information, and state
> their opinions in a great place!! So come on over!
>
> Let's get this wonderful site up and running to its full glory as
> it was before!! I look forward to seeing you all over there!!
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greencapitalist
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111 Comments
May 27 11:14 PMpeace, amen, calm....
one very important thing in this screwed up market is preservation of cash. why preserve cash? because this market gives lot of opportunity to buy good stocks at premium.
i could not believe ma was at 190 forgetting 2 earnings couple of months back. so i bought more. i am still buying ma more because it is very clear (at least to me) that market is giving v a very rich valuation. so very soon it has to either take ma to that valuation or bring v down. it is as simple as that.
so isn't v worth 80? it is worth 80 or even 100. BUT let the management show the beat ma is showing. let management improve earnings from mid 20's to mid 40's like ma. let them run away with china. let them beat maestro to the pulp in emerging markets and many other things like that.
v is fully valued. so dont get excited if you have already invested. enjoy your investment grow. but don't plug in more because if v comes down and tests 75 (and worst case 72 and 70) you should have cash.
one last parting shot: irrrespective of whether it is v or ma, their customer service sucks. axp and discover are way way up in the sky in terms of customer service. if v or ma wants to hit the other to the pulp, customer service is super important. hope somebody from v or ma is reading this para!!!!
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Plantinseeds
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51 Comments
May 27 11:41 PMTo those that were on vwinnersblogspot should read the emails and read how people were treated here as well.
Make your own minds up.
In His Mercy
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Plantinseeds
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51 Comments
May 27 11:43 PMIt states in the prospectus about how much V Inc will have to pay for V EU. In the short run it will set V back abit but, in the long run it will be great.
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Plantinseeds
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51 Comments
May 27 11:53 PMAnd for what reason?
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Cat~eyes
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42 Comments
My Website
May 28 12:10 AMOn a side note: I'm sorry you were removed from the other site for no reason. I hope you know that V was not the one who made that call.
Looking: I agree that anyone running a site that insists on reading all posts before they go up is in the business of censorship, not information sharing. But that's his choice to make. But you're right.. he took something that wasn't his and turned it into a personal crusade. It is simply sad and I hope everyone can move on from this and get back to the business at hand. I just want everyone to forget about that old site and it's obvioius agenda. SA isn't the place to talk about it, anyway, but you're welcome to blog about it under the Whatever post on the new site. But it will not be in the business of personal bashing, only the sharing of truthful information.
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Voogle
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12 Comments
May 28 06:02 AMWise people walk one step and see next two steps, that's EPS estimates and price target are raised.
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Voogle
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12 Comments
May 28 06:28 AM