Visa Stock at All-Time High: Is It Still a Buy?

Visa (V) stock has been on a tear, climbing about 12% in just two weeks to reach an all-time high of $401 per share. This surge has pushed its year-to-date gain to 14%, with most of that coming recently. The rally was fueled by two major announcements: approval from the People's Bank of China to establish a bankcard clearing institution in China, and the commercial deployment of Visa Direct stablecoin, which moves the platform from pilot to real-world use.

China is one of the largest payments markets in the world, and gaining approval to operate there opens up significant long-term growth opportunities for Visa. The stablecoin platform, now available for businesses, marks a key milestone in modernizing money movement and could position Visa at the forefront of digital payments innovation.

Analysts have taken notice. Both Baird and BMO Capital upgraded their price targets on Visa following these developments, adding further momentum to the stock. The upgrades reflect confidence in Visa's growth prospects and its ability to capitalize on new markets and technologies.

Looking ahead, Visa is set to report its fiscal fourth-quarter earnings on Oct. 27. The company typically raises its dividend in Q4, and given its history of substantial increases—ranging from 13% to 20% in recent years—investors can expect another sizable bump. Management has guided for Q4 revenue growth at the high end of low double digits, with full-year revenue growth in the low teens and EPS growth in the low- to mid-teens.

With a forward P/E of 24, Visa's valuation remains reasonable for a company with its growth profile and durable competitive advantages. The stock's recent run-up might raise questions about whether it's too late to buy, but the underlying fundamentals suggest otherwise.

The approval to operate in China is a game-changer for Visa. China is the world's largest payments market, and until now, Visa had limited access. This approval allows Visa to establish a bankcard clearing institution, which means it can process transactions directly in China. While the immediate financial impact may take time to materialize, the long-term growth potential is enormous. It also diversifies Visa's revenue streams and reduces reliance on mature markets.

The commercial launch of Visa Direct stablecoin is another strategic move. Stablecoins are gaining traction as a faster, cheaper way to move money across borders. By integrating stablecoin capabilities, Visa is future-proofing its business and tapping into the growing demand for digital payments. This could open up new revenue opportunities and strengthen Visa's competitive position against rivals like Mastercard and fintech upstarts.

These developments come at a time when Visa is already performing well. The company's guidance for Q4 and the full year is strong, with revenue and earnings growth expected in the low-to-mid teens. The anticipated dividend increase is another positive, as it reflects Visa's commitment to returning capital to shareholders and its confidence in future cash flows.

From a valuation perspective, Visa's forward P/E of 24 is not cheap, but it's reasonable for a high-quality company with a wide moat and consistent growth. The stock's all-time high might make some investors hesitant, but the catalysts are real and could drive further upside. As long as Visa continues to execute, the premium valuation is justified.

Overall, Visa's recent news reinforces its position as a leader in the payments industry. The China approval and stablecoin launch are not just short-term headlines; they are strategic moves that enhance Visa's long-term growth trajectory. For investors, this could be an opportune time to add to or initiate a position, especially with earnings and a dividend hike on the horizon.