On Thursday Mizuho upgraded Visa shares from "neutral" to "outperform," increasing its target price from $359 to $425.

The analyst points out that two-thirds of the credit card issuer's volume growth has so far been driven by its "cash-to-card" business, which lets customers to load cash onto a prepaid Visa card.

The broker explains that while Visa's growth has appeared more modest since Covid, this is mainly due to a change in the mix, with some less card-focused businesses growing more strongly.

However, Mizuho says this trend is now reversing, which is a positive sign given that the actual penetration of cards in the US is probably lower than the market thinks (75% compared to an estimated 80%-90%).

From his point of view, this means that there is still significant room for growth in card payments, pointing to another decade of growth for Visa.

The professional also cites Visa's performance in Canada and the Nordic countries, where even with card penetration of over 90%, the group's growth remains higher than overall consumer spending.


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