Visa Inc. share price up, states better-than-expected profit as it launches a share buyback program

Visa inc. beat analysts expectations on profit in the fourth quarter of the business year, as the company welcomed Chinas plans to open up its markets.

Visa reported revenue of $3.23 billion, compared with last years result of $2.97 billion, with an operating income of $1.55 billion. Net income was $1.07 billion, compared to last years $1.19 billion.

Earnings per share from class A common stock decreased to $1.73 in the fourth quarter compared with $1.86 a year earlier. Meanwhile, adjusted profit, which includes a litigation expense, was $2.18 a share, overtaking the $2.10 projection by analysts polled by Bloomberg.

“Given the opportunities in the payment space, we will continue to look for and prioritise growth opportunities” said CEO Charlie Scharf as the company launched a $5 billion share buyback program on Wednesday.

Mr. Scharf mentioned unpleasant developments in Russia as President Vladimir Putin has signed a law designed to take transactions settled by private processors and forward them to its central-bank owned processor, which will leave Visa with a $70 million decrease in revenue.

“Russia continues to move towards its goal of controlling domestic processing,” said Mr Scharf, but added that Visa continues to believe it will play an important role in Russia.

After a weekly meeting, the State Council of China announced that it would allow foreign companies to operate within its territory, as long as they meet certain criteria, which however were not disclosed.

While China is not the biggest credit spender, its market is developing fast as people are pushing the trend to use more plastic and less cash. Household debt in China was calculated to be 37% of GDP at the end of July, compared with 81% in the United States.

“We look forward to seeing the specific details and working with people within China to figure out what we need to do to participate in that marketplace, where we believe we can add a lot of value,” Mr. Scharf said on a conference call.

The announcement also attracted attention from other companies, including MasterCard.

Visa Inc. lost 0.95% on Wednesday and closed at $214.66 in New York, marking one-year increase of 5.10%. The company is valued at $133.76 billion. The stock was up 3.59% to $222.37 at 8:00 GMT in pre-market trading on Thursday. According to the Financial Times, the 31 analysts offering 12-month price targets for Visa Inc have a median target of $250.00, with a high estimate of $281.00 and a low estimate of $215.00. The median estimate represents a 16.46% increase from the last price of $214.66.