Visa leads S&P 500 higher after fiscal Q2 earnings benefit from travel rebound

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Visa (NYSE:V) stock is climbing 8.1% in midday trading, making it the biggest gainer in the S&P 500 Index, after the card network’s fiscal Q2 earnings surged past consensus estimates, surprising the Street to the upside as travel spending exceeded expectations.

Evercore ISI analyst David Togut attributes Visa’s (V) big beat to the stronger-than-expected cross-border travel recovery, which reached 82% of 2019 levels.

“With an expected, sustained strong rebound in cross-border travel potentially exceeding 2019 levels this year fueled by substantial pent-up demand, we see Visa as one of the best businesses in payments and in the S&P 500,” Togut wrote in a note to clients.

Truist analyst Andrew Jeffrey wrote in a note to clients: “The most important new flow is Visa Direct, in our opinion, and we see use cases incl P2P, cx-border remittances and payouts driving above-trend debit vol growth for the foreseeable future.” He reiterates his Buy rating and $275 price target.

From Oppenheimer analyst Dominick Gabriele: “We think over the coming quarters investors will witness the unique diversity of V’s business model that as a whole can show growth regardless where spend is: debit/credit, instore/online, services/retail sales, or domestic/international.” Visa (V) remains his coverage-wide top pick.

Mizuho Securities analyst Dan Dolev said the high-margin cross-border travel recovery drove much of the strength in Visa’s (V) “stellar” Q2 results. And there could be further upside in store for the rest of its fiscal year. The analyst reminded clients that on the company’s Q1 call, management said net revenue growth could be even higher than its high teens outlook for the full year ” if the cross-border recovery is more robust in the second half and more akin to what we saw in October and November.”

During the company’s Q2 conference call, management said the suspension of its business in Russia will hurt H2 revenue by ~4%. “Russia will also negatively impact the payments volume and cross-border volume index to 2019, each by four points,” said Vice Chairman and Chief Financial Officer Vasant Prabhu.

Take a look at management’s discussion on cross-border travel in Visa’s (V) conference call from Tuesday.