Visa () - shares increased on Wednesday as the credit card issuer reported significant increase in earnings from the first quarter, driven in part by business and personal travel. Following a "short-lived" rise in Omicron infections, the company's credit card issuer boosted much more than expected.
Visa, a Dow component, earned $1.79 per share over the three months ended in March, well ahead of the Street consensus forecast. Group revenues increased by 25% to $7.2 billion, according to Visa. Cross border expenditure increased by 38 percent, and its suspension of payments in Russia only affected about 4 percent of its revenues and resulted in a modest $60 million charge.
Visa said it expects a "high teens" percentage increase in revenues in the future financial year, with cross-border travel rising above the pre-pandemic levels forecasted in 2019.
As travel and entertainment expenditures rose, American Express () surpassed Street projections by nearly 30%, and surpassed $11.74 billion.
"In terms of the overall picture, after the short four to five-week impact of Omicron in December and January in the United States and many other parts of the world, the recovery continues to be strong," CEO Al Kelly told investors on a conference call late Tuesday. "In terms of volumes, we have seen no significant impact due to inflation, supply chain concerns, or the war in Ukraine."
"I believe the pandemic itself has accelerated people's use of card-not-present in e-commerce, and that's a sustaining model that will also help drive growth on a future basis," he added. "So I think we'll see ourselves taking advantage of that."
Visa shares were marked 5.5 percent higher in pre-market trading to indicate an opening bell price of $212.40 each, a measure that would reduce the stock's year-to-date decrease to about $2%.
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," according to Oppenheimer analyst Dominick Gabriele, who holds and surpasses his $262 price target on the stock.
"In an uncertain economic environment, this diversity along with strategic initiatives sustaining high revenue growth and thus margin expansion will likely attract investor attention," said the author.