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Visa Unveils VTAP: Is it Time to Buy After its Bold Blockchain Move?
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Payment processing juggernaut Visa Inc. (V - Free Report) introduced a new product called the Visa Tokenized Asset Platform (VTAP), which enables banks to issue and manage fiat-backed tokens (like stablecoins) on blockchain networks. This new platform is part of the company's broader strategy to integrate traditional finance with blockchain technology. Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Free Report) , a major bank, is already working with Visa on testing this solution, planning to run live pilots on the public Ethereum blockchain in 2025.
Why is This Big for Visa?
In essence, Visa is providing a way for financial institutions to bring real-world assets (like fiat currencies) onto blockchains, making transactions more programmable, secure and interoperable. This move aims to connect traditional currencies and digital assets, potentially transforming the way banks handle payments and new types of digital transactions.
VTAP will likely help Visa capitalize on the rising demand for digital assets and programmable money solutions. Leveraging its vast network of over 15,000 financial institutions and a massive presence in more than 200 countries and territories, Visa can introduce a new wave of blockchain-based products and services. This is expected to open up new revenue streams and expand its influence in the financial sector.
By offering banks a straightforward way to experiment with tokenized assets, Visa can strengthen its ties with traditional financial institutions while helping them adopt innovative digital solutions. This move reinforces its leadership position in financial technology, ensuring it remains competitive against other fintech and blockchain firms developing similar solutions.
V’s vision to support cross-chain interoperability and smart contract-based automation positions it well for the broader adoption of tokenized real-world assets. This will likely open doors for use cases beyond payments. These initiatives strengthen Visa’s long-term growth prospects by allowing it to capture opportunities in the rapidly evolving blockchain and digital asset ecosystems.
But there’s more to consider. Assessing Visa’s other growth drivers, fundamentals, and current market conditions is crucial before deciding on the stock's investment potential.
What’s Driving Visa?
Visa is well-positioned to capitalize on the increasing cashless payment volumes, driven by increased digital adoption despite pressures on lower-spending consumer segments. Its robust network, strong market presence and expanding partnerships support its ability to maintain growth, even if short-term fee income is impacted by reduced discretionary spending. Visa's focus on cybersecurity and fraud prevention enhances its value proposition for both consumers and merchants, making it a preferred choice in the payment space.
Additionally, Visa's consistent profitability, strong balance sheet and cash position allow it to deliver value to shareholders through substantial share buybacks and dividends. Its total debt, at 34.2% of capital, is below the industry average of 41.8%. It generated net cash from operations of $5.1 billion in the fiscal third quarter alone. In the last reported quarter, Visa returned $5.83 billion to shareholders and still had $18.9 billion remaining under its buyback program.
Efforts to strengthen its presence in developing economies in Asia and South America regions are expected to further boost transaction volumes, contributing to positive long-term earnings projections.
Estimates for V & Surprise History
The Zacks Consensus Estimate for current-year adjusted earnings for V is currently pegged at $9.92 per share, indicating 13.1% year-over-year growth. The consensus mark for the next year suggests a further 11.7% jump. The consensus estimate for fiscal 2024 and 2025 revenues suggests 9.6% and 9.8% year-over-year growth, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. This is depicted in the figure below.
Late last month, Visa’s shares dipped following the Department of Justice (DOJ) filing an antitrust lawsuit, accusing it of illegally dominating the debit card market. However, the decrease in share price created a solid entry point for potential investors, according to multiple analysts. The price correction enhanced Visa’s value appeal.
The company has seen its shares fall 0.6% in the past month against the industry’s 1.1% growth and the S&P 500’s return of 3.9%.
V's One-Month Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, Visa currently seems expensive, with the stock trading at a 27.87X forward 12-month Price/Earnings (P/E) compared with the Zacks industry average of 21.63X. However, this premium valuation reflects the market’s strong confidence in the company's future prospects.
Image Source: Zacks Investment Research
In comparison, its peer, Mastercard Incorporated (MA - Free Report) ,is costlier at 30.91X.
Visa Shares: Buy for Growth
Considering the positive factors discussed, Visa is certainly a stock to add to your investment portfolio. Its recent share price decline has created an attractive entry point for investors. Currently, it trades below the Zacks average price target of $308.24 per share.
Image Source: Zacks Investment Research
With expansion into blockchain technology and developing economies and their resulting diversification benefits, the company still has significant growth potential left, which helps justify its higher valuation. As such, investors may consider sticking around and snap up more shares, benefiting from its efforts to boost shareholder value.
Image: Bigstock
Visa Unveils VTAP: Is it Time to Buy After its Bold Blockchain Move?
Payment processing juggernaut Visa Inc. (V - Free Report) introduced a new product called the Visa Tokenized Asset Platform (VTAP), which enables banks to issue and manage fiat-backed tokens (like stablecoins) on blockchain networks. This new platform is part of the company's broader strategy to integrate traditional finance with blockchain technology. Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Free Report) , a major bank, is already working with Visa on testing this solution, planning to run live pilots on the public Ethereum blockchain in 2025.
Why is This Big for Visa?
In essence, Visa is providing a way for financial institutions to bring real-world assets (like fiat currencies) onto blockchains, making transactions more programmable, secure and interoperable. This move aims to connect traditional currencies and digital assets, potentially transforming the way banks handle payments and new types of digital transactions.
VTAP will likely help Visa capitalize on the rising demand for digital assets and programmable money solutions. Leveraging its vast network of over 15,000 financial institutions and a massive presence in more than 200 countries and territories, Visa can introduce a new wave of blockchain-based products and services. This is expected to open up new revenue streams and expand its influence in the financial sector.
By offering banks a straightforward way to experiment with tokenized assets, Visa can strengthen its ties with traditional financial institutions while helping them adopt innovative digital solutions. This move reinforces its leadership position in financial technology, ensuring it remains competitive against other fintech and blockchain firms developing similar solutions.
V’s vision to support cross-chain interoperability and smart contract-based automation positions it well for the broader adoption of tokenized real-world assets. This will likely open doors for use cases beyond payments. These initiatives strengthen Visa’s long-term growth prospects by allowing it to capture opportunities in the rapidly evolving blockchain and digital asset ecosystems.
But there’s more to consider. Assessing Visa’s other growth drivers, fundamentals, and current market conditions is crucial before deciding on the stock's investment potential.
What’s Driving Visa?
Visa is well-positioned to capitalize on the increasing cashless payment volumes, driven by increased digital adoption despite pressures on lower-spending consumer segments. Its robust network, strong market presence and expanding partnerships support its ability to maintain growth, even if short-term fee income is impacted by reduced discretionary spending. Visa's focus on cybersecurity and fraud prevention enhances its value proposition for both consumers and merchants, making it a preferred choice in the payment space.
Additionally, Visa's consistent profitability, strong balance sheet and cash position allow it to deliver value to shareholders through substantial share buybacks and dividends. Its total debt, at 34.2% of capital, is below the industry average of 41.8%. It generated net cash from operations of $5.1 billion in the fiscal third quarter alone. In the last reported quarter, Visa returned $5.83 billion to shareholders and still had $18.9 billion remaining under its buyback program.
Efforts to strengthen its presence in developing economies in Asia and South America regions are expected to further boost transaction volumes, contributing to positive long-term earnings projections.
Estimates for V & Surprise History
The Zacks Consensus Estimate for current-year adjusted earnings for V is currently pegged at $9.92 per share, indicating 13.1% year-over-year growth. The consensus mark for the next year suggests a further 11.7% jump. The consensus estimate for fiscal 2024 and 2025 revenues suggests 9.6% and 9.8% year-over-year growth, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. This is depicted in the figure below.
Visa Inc. Price and EPS Surprise
Visa Inc. price-eps-surprise | Visa Inc. Quote
Visa’s Price Performance & Valuation
Late last month, Visa’s shares dipped following the Department of Justice (DOJ) filing an antitrust lawsuit, accusing it of illegally dominating the debit card market. However, the decrease in share price created a solid entry point for potential investors, according to multiple analysts. The price correction enhanced Visa’s value appeal.
The company has seen its shares fall 0.6% in the past month against the industry’s 1.1% growth and the S&P 500’s return of 3.9%.
V's One-Month Price Performance
From a valuation perspective, Visa currently seems expensive, with the stock trading at a 27.87X forward 12-month Price/Earnings (P/E) compared with the Zacks industry average of 21.63X. However, this premium valuation reflects the market’s strong confidence in the company's future prospects.
In comparison, its peer, Mastercard Incorporated (MA - Free Report) ,is costlier at 30.91X.
Visa Shares: Buy for Growth
Considering the positive factors discussed, Visa is certainly a stock to add to your investment portfolio. Its recent share price decline has created an attractive entry point for investors. Currently, it trades below the Zacks average price target of $308.24 per share.
With expansion into blockchain technology and developing economies and their resulting diversification benefits, the company still has significant growth potential left, which helps justify its higher valuation. As such, investors may consider sticking around and snap up more shares, benefiting from its efforts to boost shareholder value.
Visa currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.