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Visa Pulls Full-Year Outlook Due To Pandemic

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Shares in US payments firm, Visa, are trading 0.43% lower pre-market on Friday. However, the stock has remained broadly well supported following a positive Q2 earnings report at the end of last month. It has seen the company’s share price hovering around the 200 mark.

Q2 Earnings Beat

Visa, which is the world’s largest payments systems company, posted earnings per share of 1.07. This was versus estimates of 1.03 per share on revenues of $5.85 billion. These revenues, which mark a 7% increase year on year, were also higher than the $5.75 billion the market was looking for. It reflects a surge in activity over the quarter. The company confirmed a net income of $3.08 billion. This marks a 4% increase on the $2.98 billion posted a year earlier.

The earnings report was particularly well-received given that rival payments firm Mastercard posted a drop in Q2 profits just days ahead of the Visa release. Similarly, AmEx also noted a drop in its quarterly profits. They attributed this to a surge in unemployment causing an increase in card defaults.

Visa reported a 5% jump in total payments volume over the quarter, which rose to $2.14 trillion. However, this figure was still well below the 8.2% rise seen over the same quarter a year earlier.

Full-Year Outlook Pulled

Interestingly, amidst the growing uncertainty linked to the path of the pandemic and the implications for US economic prospects, Visa decided to pull its full-year outlook.

Commenting on this, Visa’s Chief Financial Officer Vasant Prabhu said:

“Our prior outlook for fiscal 2020 is no longer relevant, and it is not possible to provide you with any reliable forecast for the second half.”

Prabhu went on to say:

“About 1/4 of our payments volume is in the hardest-hit categories, including travel, fuel, restaurants, and entertainment.”

However, despite this, Visa noted that it had recorded a surge in online spending over the final half of April. They further said that US government stimulus checks had encouraged spending in sectors such as home improvement, automotive, health care, and retail.

Visa Shares Capped By Bearish Trend Line

visa shares

The rally in Visa shares has seen price capped by the structural resistance level at 201.95 as well as the long term bearish trend line from all-time highs. While price remains held below this area, the focus is on a rotation lower within the sideways range which has developed over recent months, targeting a move back down to the 186.61 support.

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