Visa's stock faces short-term dip but eyes $1,200 by 2036 on EPS growth
Visa's stock has dipped by 11% over the past year due to inflation and weaker consumer spending. Yet analysts remain optimistic about its long-term growth, projecting a possible near-fourfold increase in share value by 2036. The company's earnings per share (EPS) are forecast to grow steadily, despite mounting competition and regulatory pressures.
Between fiscal 2015 and 2025, Visa expanded its revenue and EPS at compound annual growth rates (CAGRs) of 11% and 12%, respectively. This performance came even as global economic conditions fluctuated. The company earns money primarily through 'swipe fees', charging merchants between 1% and 3% per card transaction.
Visa and Mastercard dominate the branded credit card market, a near-duopoly that has helped them sustain these fees. However, their model now faces challenges from buy-now-pay-later (BNPL) platforms, direct account-to-account payment systems, and digital rivals. Merchant groups and regulators are also pushing for lower costs, which could force Visa to cut fees or introduce incentives for banking partners. The company does not issue cards itself but relies on partnerships with banks for distribution and debt management. Analysts predict Visa's EPS will grow at a 16.5% CAGR from fiscal 2025 to 2028. If these estimates hold and its current earnings multiple of 24 remains stable, the stock could climb to around $1,200 by 2036.
Visa's future hinges on maintaining its market dominance while adapting to regulatory and competitive pressures. A projected EPS growth rate of 16.5% suggests strong potential, but fee adjustments or new incentives may be necessary. The stock's trajectory will depend on how well the company navigates these challenges in the coming years.
