Key Takeaways
- Bill Ackman called Visa “a royalty on people spending money” on CNBC on Tuesday, after the stock gained 14% in a month.
- Analysts’ earnings estimates for Visa have risen only a little over the past year, so most of the stock’s gain has come from a higher multiple.
- Cantor Fitzgerald’s $500 target is 19% above the latest close, but it implies a forward P/E Visa hasn’t reached in five years, and the average target is 5% above the close.
- Further gains depend on estimates rising, and the Credit Card Competition Act after the midterms is the biggest threat to them.
Visa (V) just got a glowing review from one of the market’s best-known investors.
Pershing Square’s Bill Ackman told CNBC on Tuesday that this year’s focus on chip stocks let him buy businesses “we’ve always wanted to own, but were too expensive.”
When he was asked what was on that list, he started with Visa and Mastercard: “It’s sort of a royalty on people spending money. It’s one of the greatest businesses in the world.”
It’s hard to argue with this point of view.
But for anyone buying today, the next thing he said matters more: “Always too expensive for us. These were well into the 30s times earnings. We were able to pick them up in the low 20s.”
Visa isn’t in the low 20s anymore. The stock is up 14% in the past month and 21% this year, and it closed at $420.42, within 1% of its 52-week high.
Wall Street has kept up.
- On Oct. 29, Mizuho raised its target to $440 from $425, and
- Wells Fargo raised its target to $463 from $432,
- while RBC Capital kept its $466.
- On Nov. 2, Cantor Fitzgerald raised its target to $500 from $445.
- All four rate the stock a buy. From the latest close, those targets are 5%, 10%, 11% and 19% above the price.
TIKR tracks 41 analysts on Visa. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Visa, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Visa’s Analyst Ratings
The estimates have to do the work
At this price, more upside has to come from Visa earning more than analysts already expect.
Analysts see normalized EPS rising from $13.27 in fiscal 2026 to $15.02 in fiscal 2027 and $17.13 in fiscal 2028 (Visa’s fiscal year ends in September):
That’s 13% growth next year. When Visa reported its fiscal Q4, it guided to EPS growth in the low double digits to low teens for fiscal 2027, so 13% is already at the top of that range.
The estimates have barely moved, either. A year ago, analysts expected $14.47 for fiscal 2027. That’s a 4% increase over a stretch when the stock rose 23%.
The multiple did the rest
So most of the past year’s gain came from investors paying more for each dollar of earnings.
Visa trades at 28x forward earnings, above its five-year average of 27x and not far below its 32x peak in February 2022:
That’s a long way from the low 20s Ackman described. Visa’s forward P/E stood at 23x at the end of March.
Wall Street’s targets followed the stock up
Price targets tend to rise after a rally, and Visa’s did. The average analyst target climbed from $395 to $443 over the past year:
That’s a 12% rise, about half of the stock’s 23% gain.
Cantor’s $500 is the Street’s highest target, and it asks a lot. It works out to about 33x the earnings analysts expect over the next twelve months, a multiple Visa hasn’t reached in five years.
The average target, 4% above the latest close, looks like the more likely landing spot.
Great business, full price
Ackman’s right about the business. In fiscal 2026, Visa’s net revenue grew 15% to $46 billion, and revenue from its value-added services grew 30%.
But he bought it in the low 20s. At 28x, with estimates already at the top of guidance, I’d wait for a better price, or for estimates to start rising faster than the stock.
The biggest risk to those estimates is in Washington. On Oct. 19, President Trump pledged to sign the Credit Card Competition Act if Republicans win Congress.
The bill would let merchants send credit card payments over rival networks. Plus, about a quarter of Visa’s payment volume comes up for renewal with its bank clients in fiscal 2027, and client incentives already jumped 21% last quarter.
The next thing to watch is whether Congress takes up that bill after the midterms.
So what is Visa stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Visa could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
