5. Visa Inc. (NYSE:V)
Viking Global’s Q3 Stake: $963.9 million
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V), a global leader in digital payments, operates in over 200 markets, connecting 4 billion account holders to more than 130 million merchants and 14,500 financial institutions. As a key enabler of the global economy, Visa dominates the U.S. payments sector, holding 47% of all U.S. credit card outstanding balances and 52% of the U.S. credit card market.
Visa’s fiscal year 2024 concluded with impressive financial results, including $9.6 billion in net revenue—a 12% year-over-year increase—and a 16% rise in earnings per share, reaching $2.71 in Q4. The company plans to bolster its fraud prevention capabilities with the acquisition of Prosa and Featurespace in 2025, aiming to strengthen its operational framework further.
On October 30, Deutsche Bank reaffirmed its Buy rating for Visa Inc. (NYSE:V) and raised its price target from $300 to $340, citing strong fourth-quarter results and optimistic fiscal year 2025 guidance. The bank highlighted Visa’s resilient business model and its potential to capture greater growth, particularly with a potential economic recovery on the horizon. Deutsche Bank also maintained its fiscal year 2025 EPS estimate for the payments company and slightly adjusted its fiscal year 2026 projection to $12.79, introducing a fiscal year 2027 EPS estimate of $14.59.
Mar Vista Global Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Visa’s dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third and we expect the company to continue to repurchase 2-3% of shares outstanding annually. Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50% and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.”
