Visa Worst Day is over? Rebouncing from now onwards?
9th Oct (Thu) & 10th Oct (Fri) 2008 - worst days for Visa so far. Hitting all time low of USD47, dragged down by the macro economy outlook, and Financial Crisis, and panic selling.
However, 13th Oct (Mon) - beautiful rebound of 13%! back to USD58!
Only if i dare to grab some at USD47.... i will be happy man on 13th Oct :)
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A good article from schaeffersresearch.com
Visa Inc. had a bit of a rocky morning, as the company was hit with 2 different price-target reductions. Ahead of the bell, Deutsche Bank analyst Christopher Mammone cut his price target and earnings estimate for both MasterCard and Visa. Specifically, Mammone maintained his "buy" rating for Visa, but cut his price target to $72 from $93, and slashed his 2009 earnings estimate to $2.75 per share from $2.91 per share. The analyst attributed the cuts to the potential onset of a global recession and its potential to affect consumer spending. Visa makes much of its profit through fees for each time a consumer swipes their card to make a purchase. The shares also fell victim to a price-target cut from Citigoup, which revised its 12-month estimate from $88 to $60.
On July 30, Visa reported that third-quarter net income came in at $422 million, or 51 cents per share. Adjusting for certain costs from litigation and other issues, net income came in at $457 million, or 59 cents per share. Analysts were expecting Visa to report 48 cents per share. Visa is slated to step into the earnings confessional once again on October 29.
Shares of Visa haven't had an easy time since they began trading earlier this year. In fact, from V's May high of $89.84, it has dropped 48% to find today's new low of $47. The equity has fallen under its 10-day moving average since early September. If the shares are able to make any progress on the charts, they could be hindered by this trendline, combined with resistance at the 56 region. The 56 area previously acted as a level of support, but has capped the security this week.
While the stock has recently received some negative brokerage action, it seems that analysts are still optimistic. According to Zacks, 11 analysts currently give the shares a "buy" or better rating, while there are 8 analysts in the bear camp, recommending "hold." Furthermore, V's average 12-month price target, according toThomson Financial, stands at $87.17, an 81% premium to the shares' current trading price. Any additional price-target cuts or downgrades from the bullish brokers could pressure these shares lower.
However, it seems option players are becoming less optimistic on the falling shares. During the past 10 trading sessions, the put/call ratio on the International Securities Exchange (ISE) soared. The ratio of puts to calls is higher than almost 92% of all those taken since the stock has been trading, indicating a shift toward more bearish sentiment.
In conclusion, investors concerned with Visa should keep an eye on the stock's progress at the 56 region. If the stock is able to gain any upward momentum, this level could be an important region of support. However, without any positive brokerage notes, the equity could continue to fall, and any unwinding of optimism could certainly pressure the shares lower.
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