Visa Signs Major Deals With USAA And Costco

Visa's new deals will guarantee the company to improve its market position in the upcoming year.

It is believed that Visa has experienced a dry year so far and this would create troubles for the upcoming year. Analysts predict that Visa Inc. has created a tough situation for itself prior to the fiscal year of 2016. It has happened due to lower commodity prices, which significantly influenced several markets, such as Australia, Brazil, Canada, and Russia. Furthermore, this will also affect the revenues generated from the cross border operations of the company. However, the payment service provider has taken steps accordingly ‘which could turn up better prospects’.

As of now, sources suggest that the multinational financial services corporation will soon be signing to mega deal in 2016, which includes deals with USAA and Costco. Analysts say that this would have a positive impact on the company’s overall performance that could be seen in the first half of the fiscal year 2016.

On the other hand, Deutsche Bank says, “net revenue growth will prove to be an accurate indicator of Visa’s long-term prospects as good contracts will result in multiplied effect in future when its clients expand their business.”

It is known that the Visa’s deals will be contributing heavily in the revenue growth of the company in 2017 as well. All of this is currently reflected by the market price of the company. The price to book value of Visa is 5.91x, which has slightly increased from October’s 5.15x when it had not announced the USAA and Costco deals. Regardless of the fact that it was not performing at its full potential and things were going bad, these deals have brought life back in company’s business.

So far, Visa stocks are rated as a Buy from the analysts working for Deutsche Bank and UBS. The current market price of the company’s shares stands at $79.82 but UBS has given a price target of $90. Various analysts are currently in favor of Visa stocks as 32 out of 40 analysts have rated Visa as a Buy whereas 8 rated the stocks as a Sell.

Apart from this, Visa is looking for ways to begin cost-cutting strategies in its European operations, which its thinks can easily be done through the integration of technology. Visa’s focus now is to bring the margins of Visa Europe near to what it is currently producing as well. Thus, it has a lot to do on its plate and is currently focusing to keep improving its business in the near future.