Visa Stock Has Caught Wall Street’s Attention – What’s The China Angle?

• Keefe Bruyette maintained its 'Outperform' rating and $430 price target on Visa, calling the approval an “important step.”
• Evercore ISI said it was “hard to get too excited about the extrapolation of future revenues,” citing Mastercard’s inability to build a meaningful business in China.
• Mastercard took four years to move from initial approval to launch, while American Express took two years, according to Evercore ISI.

Visa Inc. (V), on Tuesday, received approval from the People’s Bank of China (PBOC) to begin preparations for a domestic bankcard clearing institution, moving it a step closer to entering China’s domestic payments market.

According to The Fly, Keefe Bruyette called the approval an “important step,” while Evercore ISI cautioned against extrapolating future revenue from the milestone.

Visa shares traded about 1% higher at the time of writing.

What Keefe Bruyette Said About Visa’s China Approval

According to The Fly, Keefe Bruyette maintained its 'Outperform' rating and $430 price target on Visa following the announcement. The analyst viewed the development as a positive regulatory move that brings Visa closer to participating in China’s domestic card market and narrows the gap with Mastercard (MA).

Keefe noted that although the approval allows Visa to begin formal preparations for a domestic bankcard clearing institution, it does not authorize the company to start operations.

Evercore ISI Flags Uncertainty Around Revenue Potential

In a separate note reported by The Fly, Evercore ISI called the approval “certainly a good headline for Visa and marks a milestone they have been chasing for a long time.”

However, the firm said it was “hard to get too excited about the extrapolation of future revenues,” citing Mastercard’s track record and its inability to grow a meaningful business in China.

Evercore also noted that Mastercard took four years to move from initial approval to launch, while American Express (AXP) took two years. The firm maintained its 'In Line' rating on Visa shares, saying the company’s domestic operations could take time to ramp up.

Visa said it would continue taking the necessary steps under PBOC regulations to begin operating domestically in China.

What Retail Thinks Of Visa

Retail sentiment on Stocktwits climbed to ‘extremely bullish’ from ‘bullish’ a day earlier, while message volume remained ‘normal’ over the past 24 hours.

Visa shares have gained over 10% year-to-date.

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