Visa stock slips after Mizuho downgrades on shift in key revenue driver
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Visa (NYSE:V) stock dips 1.2% in premarket trading after Mizuho Securities USA analyst Dan Dolev downgrades the payment network's stock to Neutral from Buy as COVID "has dramatically and likely permanently shortened the cash-to-card conversion runway."

The cash-to-card conversion runway has driven ~45% of Visa's (V) revenue growth and is historically its' single most important driver of revenue growth, Dolev writes in a note to clients.
The analyst is concerned that new competition "will increasingly nibble at Visa's volumes." He points to the emergence of account-to-account payment companies like Plaid, real-time payments initiatives like FedNow, and mega-trend including Buy Now-Pay Later and decentralized finance.
Trims price target to $220 from $255, based on 24x Mizuho's 2024 EPS estimate, roughly in line with its long-term pre-COVID median P/E.
Sees potential for a 100-200 basis point headwind to medium-term growth, which Dolev currently estimates at +14% vs. +15% consensus.
While rival Mastercard (NYSE:MA) faces many of the same secular risks, it benefits from smaller debit mix, better diversification, better agility in terms of current trends like crypto, more "out of the box" thinking, and more potential margin upside, Dolev said.
Maintains Buy rating for Mastercard (MA); lowers price target to $400 from $465, based on 26x 2024 EPS estimate.
The Neutral rating aligns with the Quant rating but clashes with the average Wall Street rating of Very Bullish.
Recall that in November, Barclays and Morgan Stanley defended Visa after Amazon (NASDAQ:AMZN) said it will stop accepting Visa credit cards issued in the U.K. starting Jan. 19 in a dispute over fees.

SA contributor BeanKounter Capital stays on the sidelines regarding Visa on its rich valuation