Daniel Acker/Bloomberg
and
are sounding upbeat about a travel recovery as vaccinations pick up in the U.S. and abroad. If the recovery holds, it could lift the stocks, which have been in a rut for months.
Speaking at a J.P. Morgan payments conference on Monday,
(ticker: V) CEO Alfred Kelly said the company is seeing momentum in both U.S. and foreign markets. About two thirds of people in the U.S. are spending more now than they did in 2019, he said. Card payments for travel picked up 20 percentage points from January to April. “I think it’s just a matter of time before domestic travel returns,” he said.
Kelly said he’s also “a little more cautiously optimistic” about cross-border travel, a highly profitable segment for Visa and a critical driver of earnings. Payment volumes are still highly depressed, compared with 2019, particularly in Europe and Asia.
But Visa is seeing improvements in countries that have opened their borders, even if it’s only in “travel bubbles” between two nations, such as Singapore and Hong Kong, and Australia and New Zealand. Southern Europe is also planning to reopen for travel this summer and bookings are up in those regions, Kelly said.
Business travel isn’t coming back as much. “I think it’s going to take quite a while for business travel to return,” Kelly said, though consumer travel is far more important to the company’s revenue base.
(MA) sounded similarly upbeat on a travel recovery, saying it’s seeing strength in countries where vaccination programs have taken hold and governments have established “travel bubbles,” according to remarks by Chief Financial Officer
Sachin Mehra.
“There are more and more of those which are starting to happen,” he said. “Travel is starting to come back.”
Investors haven’t given the card networks much credit for a travel recovery. Both stocks are trailing the
this year, with Mastercard up 2.2% and Visa ahead by 4%, well behind the market’s 12% gain.
Some analysts see it as a buying opportunity. Mizuho Securities’
Dan Dolev
reiterated a Buy rating on Visa, writing that U.S. payments volume growth in the company’s fiscal third quarter should top that of the second quarter. He raised payment volume estimates for the quarter on the strength of an estimated 55% gain in April.
“Upbeat volume results should be a positive catalyst for not onlythe stock, but also for the entire U.S. payments space,” he wrote in a note, adding that it should shine a “cheerful light” on other stocks, including Mastercard,
(FIS),
(GPN),
(FISV), and
(SQ).
Write to Daren Fonda at daren.fonda@barrons.com
